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Cryptocurrency is a novel phenomenon of digital money, freshly added into the basket of currencies. The word 'Cryptocurrency' is termed as virtual currency which doesn't have any physical embodiment. It is basically a digital code which is used & steered through the blockchain technology. Blockchain in a simple manner is a decentralized system of distributed ledgers which is meant to record & shield the information of users within the network of computers. Large number of cryptocurrencies operate through this medium of blockchain, best known among them are Bitcoin, Ethereum, Bitcoin Cash etc. Today, more than 8000 cryptocurrencies are in existence and are available for trading at any time. Many investors are willing to put their money in crypto, but the factor of 'volatility & risk' strictly questions our desire for investment. All cryptocurrencies are highly-unstable & substantially risky in nature, so before stepping in the crypto-market, here are a few reckonings to which you should pay attention;
1. Highly-Volatile Nature
Cryptocurrencies are always unsettled regarding their price-tag, in the course of demand they surge sky-high and on the contrary they hit rock bottom. Let's comprehend it through an example, at the start of this year(Jan 2021), bitcoin was trading on $30000, after the span of 3 months (April 2021), it reached it's pinnacle of $65000, but unexpectedly in the next month it dips down to where it was in January. In the month of June it again started shooting up aggressively, and this time in July it crashed below its threshold of January. This kind of Up's and Down's are very frequent in the crypto market, such frequent oscillations are also a repercussion of its decentralized structure. Another force which is behind the volatility of cryptocurrency is it's limited supply, such as, bitcoin has a limitation of 21million, being the most eminent digi-currency it has great demand and as it is finite in its existence, the law of supply & demand comes into the play and makes it more susceptible. Although crypto-market is pretty volatile & risky that it can empty your whole pocket, but at the same time it can make you an overnight cash king as well.
2. Menace Of Cybersecurity
As the space of cryptocurrency is totally deregulated, it automatically becomes a crime haven for cyber-criminals. They enjoy the prerogative of the least security to the trading portfolios and strive to fully optimize this open opportunity. According to the research of Hindu business online.com, the rate of cyberattacks in this domain is rose-up to 192% since 2015, and it has versatile kinds like Phishing, Cryptojacking, Ransomware attacks, Hacking-attacks on trading platforms etc. So, before selecting the crypto market for your investment portfolio, just keep patience & get to know about the most anonymous menace of the digital world. Crypto-jacking is the most notorious practice in the world of cybercrime. Culprits usually cast the nets through malicious links attached to the emails or through infected websites which induces the crypto mining code in the victim's device, online ads with JavaScript code could be another tool. Phishing traps are also used to sneak credentials of users from their own accounts or trading exchanges and later a ransom amount is demanded for it. In the past, few incidents have happened, where hackers brought trading exchanges to their knees by breaching the sensitive credentials of their subscribers. Cyber-criminals sell-out their breached data in the black-market for earning hefty bucks. Use of third party applications is also a regular exercise to stalk and steal the privacy of users. To guard yourself from these malwares you should tighten your cybersecurity with the help of paid security tools available in the market, and you also should have to be smart enough to detect such hunting traps, lay-down by cyber-crooks.
3. Hostile Voices Of Global Governments
In the current scenario, governments of almost every nation are raising the voice of condemnation against the cryptocurrencies. Many of them are preparing to regulate private cryptocurrencies instead of banning them completely. Countries like China, Russia, Vietnam have already crafted laws in their countries to ban private cryptos. While the governments of nations like India, US, Germany are somewhere in between, they are still questing the best possible way to regulate this highly contentious stuff.
Wrapped-up Comments
Ergo, the mentioning of these potent risk factors are merely to familiarize you with the raven side of cryptocurrencies, so that you can calibrate the amount of risk associated with this market of investment. But cryptocurrencies have that honest potential to make you an overnight millionaire or even more than that. Now, one last query may raise in your mind, that either crypto-investment is a 'Gamble or Wisdom', well it is up to you now, if you're infusing your hard-earned money in cryptos in the anticipation of multibagger returns, then according to riskometer scale it is probably an investment of ultra-high risk for you. In this matter of conversation, wisdom is only when, when you have strong financial pillars backing you, that even it can bear the weight of losing all your put-ins in cryptocurrencies.
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I am a expert SEO content writer. I explore the space of cryptocurrency & write flashing articles/blog posts on it, which enlighten & educate the readers about this investment arena.
Disclaimer
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.