It hasn’t taken very long for cryptocurrencies to take the world by storm. Created less than 10 years ago, in 2009, Bitcoin was the very first of these digital money systems to come into existence. Being decentralized, it doesn’t rely on a bank to keep a record of people’s finances, instead having everyone keep tabs on each other. A lot of people see these currencies as a great way to make some money. But, of course, like most forms of investment, this doesn’t come without its risks.
Over the years, there have been several high-profile cases involving lost cryptocurrencies. A great example of this can be found in the Mt.GOX crypto exchange, which announced in 2014 that it had lost over $450 million in the currency, all belonging to investors and other trusting customers. Of course, it’s unlikely that this will happen to you, but it’s still worth considering before you buy into an option like this.
- Security: This is the biggest issue people find with cryptocurrencies and one which has to be considered when you’re using it. It only takes a single key for someone to access your funds on a system like this. Though it is complicated and hard to guess, this makes it possible for people to access accounts using only a software system to run through thousands of possible keys.
- Value Changes: Over the last couple of months, Bitcoin has seen several huge rises and falls in its value, all related to events occurring surrounding the money. It’s very hard to tell where it will go in the coming months and years, and it could drop to a point that makes your investment almost worthless.
- Human Error: Finally, as the last issue to consider, a lot of people have lost huge amounts of cryptocurrency in the past as the result of simple human error. Forgetting your wallet key would leave you without a way to access your funds. Or, by sending money to the wrong place, it could be lost forever. These sorts of transactions can be very complicated, so it’s worth making sure you know how to carry them out before you start.
Of course, when something new hits the scene, it can be very easy to have a negative view surrounding it. But, in reality, a lot of people have been made incredibly rich through cryptocurrencies like these. Research is one of the best ways to ensure that you know what you’re doing before you venture into an unknown market.
Hopefully, this post won’t scare you away from the idea of investing in this sort of resource. Over the years, this sort of currency is likely to settle down and become a lot more secure. Until then, though, there is still a lot of risk in buying cryptocurrencies, especially if you stray away from the common options, like Bitcoin and Ethereum. This can make it hard to balance your initial investment with what you get at the end.