Bitcoin's Consequences

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Written by

Beckham

No bio yet...cryptoloverBitcoin interesed blogger

2 years ago

The Bitcoin risks that investors should be aware of

One risk is bitcoin's volatility.

Everyone is aware of how volatile bitcoin is, and those who invest in it will witness its value vary considerably. Investing in bitcoin is not for you unless you can handle the ups and downs of the currency. If the loss of your capital causes you to lose sleep, there is no use in investing. I cannot emphasise how important it is to invest your discretionary spending money in the Bitcoin market.

What exactly does discretionary expenditure entail?

It's money spent on things like vacation, dining out, entertainment, hobbies, and sports.

You would never waste money.

You would never spend your rent money or money set up for your retirement on entertainment such as a day at the races, and you should not utilise your cryptocurrency market money either.

Two-risk scenario: hacking

Bitcoin funds were kept by a firm called "Cryptopia," which was an online bitcoin trading platform. It was hacked, and everybody who had invested bitcoin with cryptopia lost their money. There were several heartbreaking instances about people losing enormous sums of money.

It bears repeating that you should never gamble with money you can't afford to lose, or put too many eggs in one basket, as many of these investors appear to have done.Also, because of the rising price of bitcoin, the actual amount of money lost by cryptopia investors is likely to be greatly exaggerated. If someone invested $1,000 in bitcoin and it increased to $10,000 over the course of a few years, only to lose everything. It will be recorded that this person lost $10,000 while in reality, they only lost $1,000.

Three threats: lost passwords

Because he can't remember his password, an Australian guy is locked out of his bitcoin wallet. If he makes ten failed login attempts, the website where he keeps his bitcoin will lock him out of his wallet permanently. He's already made eight. He has almost 300,000 dollars.

The moral of the story is to write down your password and store it safely.

The third piece of advise is to diversify your portfolio so that you don't lose too much money all at once if things goes horribly wrong.

Fourth risk: government controls

Governments have the power to prohibit cryptocurrency trade, and China has done so. Several Chinese government entities have banded together to prohibit "illegal" cryptocurrency activity. This is not to argue that other countries will follow suit; rather, it demonstrates that governments do have the authority to do so.

Fiveth risk: taxation

Only two things are certain in life: death and taxes. You can be certain that the taxman will request a copy of your tax return at some point.

This article is free to use as content for your eBook or website. R.A.Stewart's articles can be found at http://www.robertastewart.com.

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