When it comes to investment, the first question that comes to people's minds is security. After all, there is no point in obtaining a spectacular return, if in the middle of the road there is a risk that the asset will cease to exist , or that a competitor will emerge that totally destroys its value. What is a safe investment? Is Bitcoin safe? What are the risks of cryptocurrencies? Let's take an overview of concepts like blockchain and wallet, digital wallets, in addition to comparing them with traditional investments. Come and learn from the largest exchange in Latin America, the Bitcoin Market!
“Zero” risk, safe investment
The investment priced as less risky by the market are Treasury Bonds, the debt issued by the State itself. It must be remembered that although considered 100% safe, such Securities present a liquidity risk, including a possible default.
Tesouro Direto, for example, regularly cancels its weekly auctions on days of high volatility in rates, preventing holders from buying or selling through its system. Funds classified as Fixed Income may show negative returns , even when they do not involve derivatives and leverage.
According to UOL, in March 2020, more than half of the fixed income investment classes accumulated losses in the month . Investments in Tesouro Direto may show a negative return if the investor sells the Security before maturity.
Blockchain, an integral part of bitcoin
Generally speaking, the blockchain is a shared database that stores the historical record of all transactions made in the currency , since its inception in January 2009. This record is subject to attacks by hackers and malicious entities, like any large company , including banks. In this other text, we explain in detail what Bitcoin is and how blockchain works.
The bitcoin blockchain network contains the balances and movements of each address, which is controlled by a private key. Think of this private key as your bank account password . You can enter your public key , equivalent to the current account and branch , but no one can withdraw or operate such an account.
In summary, only the holder of the private key is able to authorize withdrawals from their addresses , providing security in the individual transactions and balances of each wallet, or wallet. Through cryptography, the software makes double spending impossible, sending the same Bitcoin to different wallets.
Hacking the bitcoin network
In August 2010 a flaw in the software that manages the bitcoin network recognized an undue move, generating 184 million new currencies. This immediately caught the attention of the community, which promptly made the correction, and all users discarded the chain of blocks containing the invalid transaction.
More recently, in September 2018, the developers of Bitcoin Core, this open source software used by most users, announced the correction of a bug, a flaw that could be exploited to create Bitcoins indefinitely.
Nobody even tried to carry out the attack, as they would forgo the reward for mining the block. In addition, it is known that the community could come together to invalidate such an operation in a very short time. This is clear evidence that Bitcoin is safe , due to the incentives among participants to keep the network running as planned.
Decentralization and regulation
The bitcoin network is characterized by the absence of a regulatory body . On a daily basis, Proof of Work technology, or the computational effort spent by miners, prevails . However, as we saw in the case of the 2018 unlimited currency bug, it is the users through their nodes that decide the valid rules.
Thus, although governments have control over fiat currency and ecosystem companies, including exchanges, their power over the bitcoin network is non-existent. The concentration of miners in China, due to cheaper electricity and easy access to equipment, does not represent a direct risk to Bitcoin either.
In the case of a collusion involving part of the market, the nodes of the network will continue to reject any attempt at an invalid block. Attack attempts create an alternative block sequence, a fork, which is not recognized by the bitcoin network software. The consensus that maintains the rules is formed by the totality of network participants , the nodes (nodes) running the software, which can be executed by anyone.
Exchange devaluation
For the American citizen, the pace of government debt is not so worrying. In addition to being the main currency used as a reserve by governments and central banks, the dollar is demanded by companies that issue international debt, in addition to being widely used in the trading of oil, ore and soybeans.
This reality is quite different for countries like Brazil, Argentina, Turkey, Venezuela, and South Africa. The exchange rate devaluation has devastating effects for the population. Just to give you an idea, the Real depreciated an incredible 23% in the first three months of 2020. Yes, we lost almost a quarter of the purchasing power (in dollars) of our currency.
Investing Safely
You have probably heard of a scam involving cryptocurrencies, after all, there are countless pyramids that request deposits through this medium, or that claim to carry out transactions in this market. It is for this reason that you must research well before choosing a broker, called exchange, in the universe of digital assets.
The Bitcoin Market is the largest digital currency broker in Latin America , with almost two million customers. We have the most advanced security and fraud prevention features, including 2-Step Verification (2FA) and secure word to access your accounts and perform transactions.
Internationally recognized , the Bitcoin Market is the only national exchange to figure among the 50 most trusted in the world , according to the Blockchain Transparency Institute (BTI).
Technically it is difficult to foresee any problem for Bitcoin blockchain which has been operation flawlessly but external factors may play a role in its valuation. Otherwise, it's a safe haven for millions of people ^^