The risks of using Bitcoin

[sapnu]

• The risk of Policy
  
• The risk of the law
  

• The risk of Substitution

This is a systematic risk, and it is difficult for individuals to avoid it.

• The risk of Speculation
  
• The risk of  Money laundering
  

We can control these two risks ourselves. This is not all risks, you are right, but also opportunities. Investors can profit from it.

Indeed. Even though as you enter investing in crypto, lots of risks is already expected, you still shouldn't let such take over your earnings instead you should find away on how you can avoid or reverse those risks into something beneficial towards you. If you are too afraid of confronting those risks, might as well choose not to invest or invest on something safer in crypto though there's no such thing in here. You should also remember that bitcoin is still developing and soon those risks might disappear or may occur less likely as new innovations aids safety and security towards users and investors.[/list]

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[Kong Hey Pakboy]

The risk of law and policy seems redundant to me so I don't think that it should be separated plus they're a difficult one to avoid because it's the government itself that we are against and we all know that what the government wants, they will always be able to get it.

[breathlessz]

The risk of law and policy seems redundant to me so I don't think that it should be separated plus they're a difficult one to avoid because it's the government itself that we are against and we all know that what the government wants, they will always be able to get it.

right, the government makes rules and we have to obey them, if we fight them we will certainly deal with the law, therefore for bitcoin I think we are still lucky that bitcoin ownership is not prohibited, but we must not use it as a means of payment, and if it is for trading then there is a risk losing money is personal responsibility

[Elsaveronicha]

So far I buy bitcoin only for investment. Bitcoin can also be used as a means of payment but the reason people buy bitcoin is for investment. Investing in bitcoin also has risks, but investing in bitcoin can make us get big profits. So I think the risks of investing in bitcoin smaller than on profits.

[amihada]

every action there must be a risk as well as bitcoin investment, but if we are careful then the risk is small and if we are greedy then the risk faced is very large depending on how we control our emotions,

[mrongoz_imut]

Here are 3 crypto investment risks to understand:

1. The risk of cryptocurrencies is relatively large because the medium of exchange only uses cryptography. This means that there is no guarantee of assets from the investments invested. 2 Fluctuations in the price of digital money are also very high. So that it becomes a trading transaction that is classified as very speculative. But we don't need to be afraid of all the risks, because if there is no risk, there will be no profit.

[Ararbermas]

No doubt that bitcoin security is better than bank system, because it can't be controlled by government then the easiest way is to ban bitcoin, but i'm sure because of strong global community make bitcoin will continue to shine.

the security of bitcoin isn't good mate that's why op telling the risk when it comes having such asset wherein reason as well government were against in it and most of them wants to ban bitcoin. But yes because of strong support of bitcoin it can be vanished no matter what happen.. Probably let's just a accept the fact that it's okay how it can be use it right now, instead of assuming something very impossible to happen in the future , right?

[maisao1991]

I appreciate your sharing this post because, about the real high risk when we have decided to invest in this market, the risk is something to accept, but in order to minimize the risk, we need to understand all the technologies as well as the development direction of the project as well as BTC.

[cunguks]

I appreciate your sharing this post because, about the real high risk when we have decided to invest in this market, the risk is something to accept, but in order to minimize the risk, we need to understand all the technologies as well as the development direction of the project as well as BTC.

From the start, everyone has said that trading crypto assets will always be a high risk. even some and even all exchange platforms also include such warnings from the start. so the crypto market is not a place for those who just want to play and throw their money away.

[kryptqnick]

I think the risks of policy and law should be united because it's essentially the same sort of regulation pressures. If banks' guidelines aren't legally binding, their impact is insignificant, and if they are legally binding, they basically acts as laws. Also, the banking sector plays a major role when legislation on financial matters is developed, so it's also a connection that justifies making it a single risk point. As for substitution, I think it's a very low risk because there've been tons of altcoins for years, and yet Bitcoin is the market's giant, so it doesn't seem like they can pose a big threat. Another hypothetical risk could be the development of quantum computers to the point when cryptography of Bitcoin becomes obsolete. But I think it's not more likely than substitution.

[Qirtov]

One of the biggest risks in Bitcoin investing is its volatility. Bitcoin price fluctuations are so fast that they can change in the blink of an eye. No one knows when the Bitcoin price will skyrocket or even fall. The second is legality because in some countries Bitcoin is only allowed to be used as a commodity, not a means of payment other than the country's currency. The third is digital theft because Bitcoin investments occur digitally, so there are many risks of theft that can occur by hacking due to poor security in Bitcoin investments. If your Bitcoin wallet is hacked by irresponsible people, of course all your assets can be taken away.

[Slow death]

sincerely for the case of a country like mine I would say that the government of my country would fear bitcoin due to bitcoin decentralization, example:

with fiat my country's government can control everything, they know how much money and other assets the opposition parties have and with that they can easily limit funds for the opposition parties, of course without money the opposition parties cannot make a good campaign that allows them to win elections. but let's imagine that the opposition parties bought 10 bitcoins for the price of 1000$ and sold for the price of 60,000$. my country's government wouldn't know about it and the opposition parties would have a lot of money to campaign, in my country's case it would just be that " decentralization of bitcoin " the government would be afraid of bitcoin.

[AicecreaME]

There are five risks in the use of Bitcoin:

• The risk of Policy
  From a macroeconomic perspective, due to the “constant total amount” of Bitcoin, its circulation will be accompanied by the flow of goods and services, which has a small transmission effect on inflation. Adding the weight of Bitcoin to the world currency can weaken the transmission effect of monetary policy.
  
  1) Bitcoin breaks the central bank's monopoly on currency issuance. Due to its technological complexity, innovation and global nature, it is difficult for the central bank to monopolize its issuance rights.
  
  2) Cash in circulation or deposits in the banking system may be replaced by Bitcoin, which will have an impact on the base currency and currency multiplier; in addition, the existence of Bitcoin has an impact on the speed of currency circulation and its price level.
  
  3) The global nature of Bitcoin obscures the national boundaries that restrict the use of currency, and it is difficult for a country's monetary policy to isolate the influence of other countries' economies and policies.
   
  The central bank will introduce policies from various aspects to suppress Bitcoin, so as not to affect its monetary policy.
  
  
• The risk of the law
  
  In August 2013, Germany announced the recognition of the legal status of Bitcoin and it has been included in the national regulatory system. Germany is the first country in the world to recognize the legal status of Bitcoin.
  In May 2016, Japan approved the digital currency regulation bill for the first time and defined it as property.
  On June 9, 2021, the El Salvadoran government passed a bill to make Bitcoin a legal tender here. From September 7th, it will become the country's legal tender. El Salvador will become the first country in the world to use Bitcoin as a legal tender.
  
  At present, Bitcoin is only protected by the laws of various countries as a virtual commodity rather than a currency.
  
  Only a few countries recognize this status of Bitcoin and do not support it as a major currency.
  
  In cross-border Bitcoin infringement cases, because countries have different legislations on Bitcoin and have different characterizations of Bitcoin, the resolution of related disputes involving Bitcoin is relatively lagging.
  

• The risk of Speculation
  Bitcoin does not have national credit or physical assets as protection, and the price may fluctuate sharply, which is extremely risky for investors. However, in my opinion, speculation is a high risk but also an opportunity, and it depends on the individual.
  
  
• The risk of  Money laundering
  Bitcoin has the characteristics of anonymity and freedom from geographical restrictions. The flow of funds is difficult to monitor, and it will be very easy to circumvent government supervision, making it easy for criminals to conceal the source and direction of their funds, which provides convenience for money laundering, terrorist financing and evasion of sanctions .
  
  They buy other people’s bitcoins through the exchange platform, and then bring the bitcoins to other platforms or their own wallets. Through multiple transfers, the tracking path is difficult or directly impossible to trace, and then through overseas trading platforms or black markets or directly Commodities purchased overseas are exchanged for foreign currency to complete a series of acts such as money laundering.
  

• The risk of Substitution

    Bitcoin still has shortcomings such as lack of credit guarantee, poor security performance, and easy to cause deflation. At the same time, it has to face the competition of various emerging altcoins, and there is a greater
   risk of substitution! Although I think this possibility is very small.

It's a great list you provided here for additional knowledge, mate. Thanks for sharing this, much appreciated.

I know there are really a lot of risks when it comes to investing. Risks are present in any decision you will make and execute. Bitcoin investment also possesses those risks like what other investment vehicles have. Everyone must know that investing is really risky and it's going to be a lot risker when you enter it without enough knowledge about it. However, you can always minimize it by proper research before diving into it. Now, if you are uncomfortable with other risks it has, then maybe you have to find another investment that you could have whole peace of mind. Risk is always present, you can just make ways to lessen the chance of you falling onto the losing end.

[wxa7115]

I think that some of these risks are a bit overblown, some are certainly true and some I don't think are as much risks as they are issues for governments.  I think the biggest risk for bitcoin, and other cryptocurrencies for that matter , is the risk of loss.  There are far too many people "in bitcoin" that have much of or most of their life savings inside it.  This is not the proper way to "invest" , or "store" bitcoin..you need a well rounded portfolio at all times.  To me, that is it's biggest risk.

And unfortunately the risk of loss comes in many ways and forms, not only you can lose a lot of money if you do not know what you are doing and you invest at the wrong time when there is a lot of hype and then the market turns against you, that is just one way to lose your money but we know that are many ways to do so.

Another way in which you can lose your coins is due to scammers that we know are incredibly common here and that can get away with almost anything, and the final way in which you can lose your coins is if you are unable to maintain backups of your seed words and your private keys and this can be very problematic because unlike the other two this is a problem with the nature of cryptocurrencies themselves, so even if you think that you are doing your best in order to back up such data many things can happen that can still make you lose those coins.

[dzonikg28]

The risk of advancements in technology to crack cryptography is probably another one. I don't know how severe that problem is and people say the algorithm could quickly be adapted, but if somebody cracks the algorithm I doubt that will ever become public knowledge until the harm done is really extraordinarily big.

If that does happen, crypto is probably the last that will get affected. The algorithm is used by others such as banking etc, and cracking crypto might not be as profitable as social engineering, doing ransomware, etc. Which is why most attack happens through spam e-mail, phishing link, etc.

Didn't quite think about that but that's a valid point for sure. So the interconnectedness between different sectors through the "interface" of using the same or similar hash algorithm is actually another safety barrier for cryptocurrencies in general or Bitcoin in specific. If someone cracks Bitcoin, we'll have a global problem anyway and that person or entity who cracked the algorithm would most likely not abuse that knowledge because it would certainly lead to unstoppable global riots. I guess if someone were to crack it, the best that entity could do is ask for a couple of billion dollars and hand over the information to a safe organization or institution.

[GreatArkansas]

The only risk that we should worry about is the risk of bitcoin going down at a really erratic pace, that's the only risk in my opinion that we should worry too much about because it's going to affect us directly especially if we have a lot of investment.

The price of Bitcoin going down is normal now. The market decides, and Bitcoin price going down sometimes is also good, it makes the market healthy, not all time going up only. Take note that there are already a lot of people using Bitcoin, some selling it for something and some buying it.
It can be considered risk, it will always.

[ultrloa]

The only risk that we should worry about is the risk of bitcoin going down at a really erratic pace, that's the only risk in my opinion that we should worry too much about because it's going to affect us directly especially if we have a lot of investment.

The price of Bitcoin going down is normal now. The market decides, and Bitcoin price going down sometimes is also good, it makes the market healthy, not all time going up only. Take note that there are already a lot of people using Bitcoin, some selling it for something and some buying it.
It can be considered risk, it will always.

That's the basic things happen to bitcoin since buy and sell is the first thing people do on bitcoins but the one we need to look for upon buying is when should we execute our orders since sometimes we might fall on bad timings since the market is at the top then suddenly it falls that's why we need to be more careful upon buying and always check the chart so that we will not be a bag holder and can able to earn something in return if we place at a good position upon buying.

[Marvell1]

I agree with you about the money laundering risk. Bitcoin is superior to fiat because of its anonymity, decentralization. But because of that, criminals and terrorists will take advantage of the anonymity to be able to launder money and trade illegally across continents that are difficult to control by governments. Bitcoin is really dangerous when used by criminals.

[haasanjui]

There are many benifits of using Bitcoin but there are some risks of using Bitcoin. If you can invest and trade Bitcoin and market goes low it can effect Bitcoin price and you can loose your money but if you patient and wait for market pump you can earn profit and there are some account scam issues can happen but if you will not share you private key, password or seed phrase you will not loose your account.

[Golftech]

There are many benifits of using Bitcoin but there are some risks of using Bitcoin. If you can invest and trade Bitcoin and market goes low it can effect Bitcoin price and you can loose your money but if you patient and wait for market pump you can earn profit and there are some account scam issues can happen but if you will not share you private key, password or seed phrase you will not loose your account.

As it's been there for more than 10 years those information are really being adopted by people who take time knowing

and learning this asset, there are many pro and con and it going to be depend from how investors and traders will treat

this up and how they'll going to manage and balance both the risk and opportunities.