4 bitcoin risks you should know when investing in bitcoin

[jane maradona]

The value is not guaranteed, so buying and using Bitcoin carries a number of inherent risks. Many investor warnings have been issued by the US Securities and Exchange Commission (SEC), the Financial Sector Regulatory Authority (FINRA), the Department of Consumer Financial Protection (CFPB), and institutions. other officials

Explore more What is Bitcoin? Basic knowledge for effective Bitcoin investment: https://vakaxa.com/vi/bitcoin-la-gi/

Legal risks
Bitcoin can be used for black market transactions, money laundering, illegal activity or tax evasion. Therefore, governments can seek to regulate and regulate the use or trading of bitcoin.

For example, in 2015, the New York State Department of Financial Services finalized regulations that would require companies to process purchases, sales, transfers, or store bitcoins to record customer identities. Transactions of $ 10,000 or more will have to be recorded and reported.
In addition, the lack of uniform regulations on Bitcoin and other cryptocurrencies raises questions about their lifetime, liquidity and popularity.

Security risks
As with any system, Bicoin transactions are at risk of being hacked, malware and malfunctioning during operation. If a hacker gains access to the Bitcoin owner's computer hard drive and steals the private key, he can transfer the stolen Bitcoin to another account.
A particularly notorious theft took place in 2014, when Mt. Gox, a Bitcoin exchange in Japan, was forced to shut down after Bitcoin worth millions of dollars was stolen.

Fraud risks
Because the issuance of cryptocurrencies, ICOs etc. has not been regulated by the government yet, scammers can sell fake bitcoin. For example, in July 2013, the SEC took legal action against a Ponzi program operator related to Bitcoin.

Tax risks
In March 2014, the IRS announced that all cryptocurrencies, including Bitcoin, would be taxed as an asset. Therefore, there is no legal way to protect Bitcoin earnings from taxes

[Anonylz]

Don't this risk you listed above applies to fiat as well? Except for legal risk because as it is btc those not have government approval worldwide,

When you talk security risk that also happens with bank accounts and what have you, many people have had their bank account comprised and money is been stolen, the security level their is not exactly first class,

Fraud and Tax risk also applies in fiat, infact, more common with fiat than crypto, the government tax you for almost everything, directly or indirectly, you are paying tax,
Fraud is another story on its own so no need to go deep, bottomline is btc is no different than fiat when it comes to those risk you mentioned above.

[nara1892]

everything you say happens more to fiat currencies,
You talk about this like we're in 2015, where many negative issues have been raised to bring down the price of bitcoin

[CryptoBry]

Personally, I would consider Bitcoin to be risky but rewarding as well. Maybe it is time that people should look at this platform at its totality and its potential as a big disruption in the way things are going on especially in the world of finance, money, trading and related concerns. Bitcoin is all about returning the power to the people and though it is not perfect (nothing is) and can can argue that this is not happening at all at this time there is no question that Bitcoin has become like a catalyst in the marketplace.

All the major risks mentioned by OP here are all existing in the market and it is apt that newbies should educate themselves first before jumping into the waters so there will be no big surprises. People should not just focus on many possible financial rewards that can come dealing with Bitcoin but also the possible pitfalls one can experience when not very careful. I was once a victim of some scams and wallet phising so I know the experience of losing some cryptos or tokens into thin air but out of that experience I learned a lot of things and I decided to never give up in my love for Bitcoin.

Just to make things clearer and fairer, many of the possible risks we associate with Bitcoin or cryptocurrency in general can also be present in traditional fiat money or financial institutions to varying degrees.

[Kyraishi]

I feel most of the risk your saying here also apply to fiat currencies, and it's more so general advice, not specific for crypto's. For example:

Legal risk: You can money launder with fiat currencies, people with a lot of cash get in trouble, same thing.

Security risk: bank accounts get hacked, people steal funds from you, not just BTC.

Fraud: People can easily commit fraud with fiat.

Tax: Have you never seem people avoid tax using cash, or other ways?

[avikz]

Legal risks
Bitcoin can be used for black market transactions, money laundering, illegal activity or tax evasion. Therefore, governments can seek to regulate and regulate the use or trading of bitcoin.

How black market used to function before 2009? WHy to bind this risk only with cryptos?

Security risks
As with any system, Bicoin transactions are at risk of being hacked, malware and malfunctioning during operation. If a hacker gains access to the Bitcoin owner's computer hard drive and steals the private key, he can transfer the stolen Bitcoin to another account.
A particularly notorious theft took place in 2014, when Mt. Gox, a Bitcoin exchange in Japan, was forced to shut down after Bitcoin worth millions of dollars was stolen.

Applies to Banking sector as well! Read the references below,

5 most scandalous fraud cases of 2018:
https://www.fraud-magazine.com/2018Top5Frauds/

5 Recent Banking Frauds In India:
http://www.businessworld.in/quickbytes/5-Recent-Banking-Frauds-In-India/15-02-2018-316/

ANALYSIS OF TOP 100 BANK FRAUDS:
http://www.cvc.nic.in/sites/default/files/new1111.pdf

I can go on and on. But the above links prove my point!

Fraud risks
Because the issuance of cryptocurrencies, ICOs etc. has not been regulated by the government yet, scammers can sell fake bitcoin. For example, in July 2013, the SEC took legal action against a Ponzi program operator related to Bitcoin.

Look at the above list! But yes, ICOs are indeed a real risk for crypto owners but only if they are not aware about the market. Those who are aware of the market, usually stays away from such frauds!

Tax risks
In March 2014, the IRS announced that all cryptocurrencies, including Bitcoin, would be taxed as an asset. Therefore, there is no legal way to protect Bitcoin earnings from taxes

Why do you want to evade tax? At least it has got the legal status in USA. In many other countries, the legal framework of bitcoin/cryptos are still confusing. It is better to be regulated than to be criminalize!

[coin-investor]

You should not start  investing and holdling Cryptocurrency until you learn everything about how to secure your wallet and how hackers are going to try to hack your wallet, you can find everything you need to learn on how to do all these on Youtube and Google, everybody starts here it's risky experimenting on your own without doing research.

[DevilSlayer]

Identifying the risks that you will take and also the rewards that you will get is important to consider before investing in bitcoin. I'm a trader and I waiting to make an entry point before I make investment. By having strategies, I can increase  my investments and as well as protect it.

[Kakmakr]

The value is not guaranteed, so buying and using Bitcoin carries a number of inherent risks. Many investor warnings have been issued by the US Securities and Exchange Commission (SEC), the Financial Sector Regulatory Authority (FINRA), the Department of Consumer Financial Protection (CFPB), and institutions. other officials

Explore more What is Bitcoin? Basic knowledge for effective Bitcoin investment: https://vakaxa.com/vi/bitcoin-la-gi/

Legal risks
Bitcoin can be used for black market transactions, money laundering, illegal activity or tax evasion. Therefore, governments can seek to regulate and regulate the use or trading of bitcoin.

For example, in 2015, the New York State Department of Financial Services finalized regulations that would require companies to process purchases, sales, transfers, or store bitcoins to record customer identities. Transactions of $ 10,000 or more will have to be recorded and reported.
In addition, the lack of uniform regulations on Bitcoin and other cryptocurrencies raises questions about their lifetime, liquidity and popularity.

Security risks
As with any system, Bicoin transactions are at risk of being hacked, malware and malfunctioning during operation. If a hacker gains access to the Bitcoin owner's computer hard drive and steals the private key, he can transfer the stolen Bitcoin to another account.
A particularly notorious theft took place in 2014, when Mt. Gox, a Bitcoin exchange in Japan, was forced to shut down after Bitcoin worth millions of dollars was stolen.

Fraud risks
Because the issuance of cryptocurrencies, ICOs etc. has not been regulated by the government yet, scammers can sell fake bitcoin. For example, in July 2013, the SEC took legal action against a Ponzi program operator related to Bitcoin.

Tax risks
In March 2014, the IRS announced that all cryptocurrencies, including Bitcoin, would be taxed as an asset. Therefore, there is no legal way to protect Bitcoin earnings from taxes

This is just excuses that are used to justify regulation, because most of these risks are associated with normal Fiat transactions too.   OK, we know the SEC has to protect the consumer and that Fiat based currencies and investment tools are highly regulated, so we should not expect Bitcoin to be exempt from these regulations, but are these regulations really suggested to protect the consumer or is it suggested to help the government to control their citizens and to earn more taxes.  

Let's hope the SEC handles these issues in the same way that they would handle any other technology that are not backed by the government.  

[Kyraishi]

You should not start  investing and holdling Cryptocurrency until you learn everything about how to secure your wallet and how hackers are going to try to hack your wallet, you can find everything you need to learn on how to do all these on Youtube and Google, everybody starts here it's risky experimenting on your own without doing research.

What's the point of this post, he's not asking for advice, he's giving his opinions on why BTC investments are risky, which is flawed due to some of the logic he provides - nothing related to holding BTC, and securing your wallet..

The value is not guaranteed, so buying and using Bitcoin carries a number of inherent risks. Many investor warnings have been issued by the US Securities and Exchange Commission (SEC), the Financial Sector Regulatory Authority (FINRA), the Department of Consumer Financial Protection (CFPB), and institutions. other officials

Explore more What is Bitcoin? Basic knowledge for effective Bitcoin investment: https://vakaxa.com/vi/bitcoin-la-gi/

Legal risks
Bitcoin can be used for black market transactions, money laundering, illegal activity or tax evasion. Therefore, governments can seek to regulate and regulate the use or trading of bitcoin.

For example, in 2015, the New York State Department of Financial Services finalized regulations that would require companies to process purchases, sales, transfers, or store bitcoins to record customer identities. Transactions of $ 10,000 or more will have to be recorded and reported.
In addition, the lack of uniform regulations on Bitcoin and other cryptocurrencies raises questions about their lifetime, liquidity and popularity.

Security risks
As with any system, Bicoin transactions are at risk of being hacked, malware and malfunctioning during operation. If a hacker gains access to the Bitcoin owner's computer hard drive and steals the private key, he can transfer the stolen Bitcoin to another account.
A particularly notorious theft took place in 2014, when Mt. Gox, a Bitcoin exchange in Japan, was forced to shut down after Bitcoin worth millions of dollars was stolen.

Fraud risks
Because the issuance of cryptocurrencies, ICOs etc. has not been regulated by the government yet, scammers can sell fake bitcoin. For example, in July 2013, the SEC took legal action against a Ponzi program operator related to Bitcoin.

Tax risks
In March 2014, the IRS announced that all cryptocurrencies, including Bitcoin, would be taxed as an asset. Therefore, there is no legal way to protect Bitcoin earnings from taxes

This is just excuses that are used to justify regulation, because most of these risks are associated with normal Fiat transactions too.   OK, we know the SEC has to protect the consumer and that Fiat based currencies and investment tools are highly regulated, so we should not expect Bitcoin to be exempt from these regulations, but are these regulations really suggested to protect the consumer or is it suggested to help the government to control their citizens and to earn more taxes.  

Let's hope the SEC handles these issues in the same way that they would handle any other technology that are not backed by the government.  

The SEC overregulates fiat currencies which is one of the reasons why BTC and being anonymous is so popular, most of the regulations that have been made in crypto are to put more money into the government's hands.

[lobat999]

I feel most of the risk your saying here also apply to fiat currencies, and it's more so general advice, not specific for crypto's. For example:

Legal risk: You can money launder with fiat currencies, people with a lot of cash get in trouble, same thing.

Security risk: bank accounts get hacked, people steal funds from you, not just BTC.

Fraud: People can easily commit fraud with fiat.

Tax: Have you never seem people avoid tax using cash, or other ways?

Quite a good comparison of Bitcoin - Fiat risks which are almost equal in nature considering every known investment has its own risks associated with it and  both have no bulletproof mechanism to avoid it. In this sense, OP forgot the most critical risk that Bitcoin has, its degree of volatility! But I think this can be managed also if we choose to hedge Bitcoin such as opting for futures.

Nevertheless, is it also worth mentioning that Bitcoin's inherent volatility could also benefit its holders if its value rose unexpecdtedly in a short period of time. Also, not all four risk mentioned by the OP apply in many countries since they don't have yet a legal  and tax framework to implement it at least not for now.

[Klausi]

everything you say happens more to fiat currencies,
You talk about this like we're in 2015, where many negative issues have been raised to bring down the price of bitcoin

Maybe OP is still living in the past. All of the currencies we all have around the world are being use in crimes, illegal activities, and other evil deeds, yet the Government are not shutting down fiat because it is normal. We are freely to decide in where we are going to use our money, the only disadvantage is if we use our money in bank purchasing illegal things, that's fvcked up, expect the FBI will barge your house any time.

And the risks OP mentioned was overcome by bitcoin a long time ago.

[gunhell16]

Everything is this world has its own risk.
Every investment we will do has the risk to take. FIAT has a stock market and you are risking your money also there.
That is normally the more you risk to take the more profit you will engage.
Even without the existence of BITCOIN, there is the risk you are talking about since then.

[Murat]

It's not that right thing you said here about Bitcoin, I think every investment requires some risk, as you mentioned here, Bitcoin has a legal crisis it's true but it doesn't mean that Bitcoin only uses for the purpose of Money laundering, Black Market Transaction, and so-called illegal aspect. That's not fair, Bitcoin has a lot of positive use also in the current context. Secondly, You have said that about security risk, It's a lame opinion, You have to know very clearly ins and outs of this platform and Bitcoin's security then you should provide any opinion otherwise people get confused from this statement. and finally, you were trying to address the fraud risk and tax risk, It's nothing related to the Bitcoin, If it's true then People don't invest their money still now. one thing, You have to consider without taking a risk you couldn't gain anything.

[Murat]

It's not that right thing you said here about Bitcoin, I think every investment requires some risk, as you mentioned here, Bitcoin has a legal crisis it's true but it doesn't mean that Bitcoin only uses for the purpose of Money laundering, Black Market Transaction and so-called illegal aspect. That's not fair, Bitcoin has a lot of positive use also in the current context. Secondly, You have said that about security risk, It's a lame opinion, You have to know very clearly ins and outs of this platform and Bitcoin's security then you should provide any opinion otherwise people get confused from this statement. and finally, you were trying to address the fraud risk and tax risk, It's nothing related to the Bitcoin, If it's true then People don't invest their money still now. one thing, You have to consider without taking a risk you couldn't gain anything.

[kayvie]

Risks you have mentioned are also related to fiat money, they are actually pointing the risks of using fiat. legal risk is not more likely related since bitcoin is not regulated by the government.

Everything is this world has its own risk.
Every investment we will do has the risk to take. FIAT has a stock market and you are risking your money also there.
That is normally the more you risk to take the more profit you will engage.
Even without the existence of BITCOIN, there is the risk you are talking about since then.

Indeed, they are discussing that bitcoin is risky because it can be used for illegal transactions/gambling/investment scheme, which is also happening at fiat. Risks is always there, we should not avoid it. Just face it.

[Baby Dragon]

Risks you have mentioned are also related to fiat money, they are actually pointing the risks of using fiat. legal risk is not more likely related since bitcoin is not regulated by the government.

Everything is this world has its own risk.
Every investment we will do has the risk to take. FIAT has a stock market and you are risking your money also there.
That is normally the more you risk to take the more profit you will engage.
Even without the existence of BITCOIN, there is the risk you are talking about since then.

Indeed, they are discussing that bitcoin is risky because it can be used for illegal transactions/gambling/investment scheme, which is also happening at fiat. Risks is always there, we should not avoid it. Just face it.

Certainly, because it is the only way to get the benefits that we wanted considering the fact that we can't easily achieve our goals on investing. We can't easily get rid of it but if we have enough understanding, we can handle such things despite of having some difficulties.

[Mandoy]

I dont think that those are really risk. Let us say legal risk, this is not a risk. Is a legal compliance a risk I will say no, for an ordinary individual that has nothing to do with illegal and illicit activities theres no such thing as legal risk. Another thing is security risk, I guess on this thing you have a point since hackers are everywhere and may access your account. Fraud risk, this is not a risk at all since it all depends on yourself if you will allow yourself to be scammed, this is the same with fiat currency if you allow yourself to be scammed then you lose your money. Tax risk: I dont hear this one maybe in the USA but in other parts of the world cryptocurrency is not taxable.

[Youghoor]

The value is not guaranteed, so buying and using Bitcoin carries a number of inherent risks. Many investor warnings have been issued by the US Securities and Exchange Commission (SEC), the Financial Sector Regulatory Authority (FINRA), the Department of Consumer Financial Protection (CFPB), and institutions. other officials

Explore more What is Bitcoin? Basic knowledge for effective Bitcoin investment: https://vakaxa.com/vi/bitcoin-la-gi/

Legal risks
Bitcoin can be used for black market transactions, money laundering, illegal activity or tax evasion. Therefore, governments can seek to regulate and regulate the use or trading of bitcoin.

For example, in 2015, the New York State Department of Financial Services finalized regulations that would require companies to process purchases, sales, transfers, or store bitcoins to record customer identities. Transactions of $ 10,000 or more will have to be recorded and reported.
In addition, the lack of uniform regulations on Bitcoin and other cryptocurrencies raises questions about their lifetime, liquidity and popularity.

Security risks
As with any system, Bicoin transactions are at risk of being hacked, malware and malfunctioning during operation. If a hacker gains access to the Bitcoin owner's computer hard drive and steals the private key, he can transfer the stolen Bitcoin to another account.
A particularly notorious theft took place in 2014, when Mt. Gox, a Bitcoin exchange in Japan, was forced to shut down after Bitcoin worth millions of dollars was stolen.

Fraud risks
Because the issuance of cryptocurrencies, ICOs etc. has not been regulated by the government yet, scammers can sell fake bitcoin. For example, in July 2013, the SEC took legal action against a Ponzi program operator related to Bitcoin.

Tax risks
In March 2014, the IRS announced that all cryptocurrencies, including Bitcoin, would be taxed as an asset. Therefore, there is no legal way to protect Bitcoin earnings from taxes

I'm a bit confused here. The only risks I know and think people investing in bitcoin face or encounter are;
1.price volatility which can even be a curse or blessing depending on the plans you the investor have for investing
2. the security nature of the platform you the investor is buying or selling your bitcoin on
3. your level of knowledge and understanding of bitcoin investment.
I really don't think your four risks have some strong connection with bitcoin investment, these might be the risks for investors investing in bitcoin related investment projects. With such projects, you are at your risk if you think crypto investment is a get rich quick avenue....

[Darker45]

Since this risk warning came from SEC, FINRA, and CFPB, this is biased and prejudiced against Bitcoin or crypto.

Why don't they do the same to fiat?

Legal risks
Billions and billions of fiat have been used for black market transactions, money laundering, illegal activity and tax evasion.

Security risks
Fiat has been stolen, used in illegal activities, assigned whimsical value, printed out of thin air and indiscriminately, and so on and so forth.

Fraud risks
Fiat, even if directly owned and regulated by the government, is always faked. I'm not sure if there is one original left.

Tax risks
Fiat is taxed too heavily in all transactions.

#ChooseBitcoin