As markets continue to reach for all-time heights– warnings of risk and uncertainty about investing in Bitcoin once again abound.
The media seems to love to hate Bitcoin. Throughout the more than a decade long legacy of the coin, media outlets have loved to make pallid predictions about the future of the digital currency– each aging about as well as a carton of milk left on the counter of a warm kitchen. But despite this seemingly lukewarm relationship, Bitcoin and other cryptos have continued to make gains, in both popularity and value.
So while the foremost investment news outlets seem to once again be tooting the horns of terror, crypto enthusiasts and those learning the market can instead see them as a keen indicator that the market is indeed in good health. With platforms like Bitvavo.com, specifically designed to help newbie investors wade through the mud and come out glittering on the other side, as they learn the ropes of a market that seems to refuse to quit.
Three of the Biggest Bitcoin Risks
With major news outlets recently publishing headlines dedicated to pointing out the inherent risks of investing in Bitcoin, we took a closer look at some of the most common perils they put forward, and instead found more opportunities to make gains and engage with what stands to be the future of finance as we know it.
Decentralized Means Deregulated
Concerns over Bitcoins’ inherent decentralization have always been the favored exposed jugular for many of the coins’ detractors. Such as the coins’ security and scalability that is still relevant even without the oversight from centralized authorities such as bankers or federal reserves. Without these intermediaries, cryptocurrencies are largely uninsurable, or indeed backed by no consumer guarantee. There is no one entity that can be charged with the safekeeping of any crypto finances, or that has finite oversight of the ebb and flow of the coin.
Incredible highs, crippling lows, and that’s all just in the last five minutes. Bitcoin and other cryptocurrencies suffer from extremely volatile valuations– prices that are subject to change within the blink of an eye. Many outlets attribute this to the currencies’ global accessibility, a paradigm in which anyperson interested in owning crypto, can– and with ease. Suggesting that this ease of adoption could soon see a narrow exit, as should the market make one of its many famous pivots_ many could be left holding a digital promise that isn’t worth the binary code it’s comprised of.
Market Manipulation and Exchange Extortion
Because of its still relatively novel existence, coupled with the myriad of nuances that are industry specific, cryptocurrencies present a prime environment for criminality, manipulation, and extortion. With few investors really understanding what it is they are investing in, and others happy to look towards the next shiny new object that’s dangled in front of their keyboards. With no better examples of this than the 2020 Twitter Scam or the near instantly vested interest in jokecoinslike Dogecoin. Bitcoin whales have long been under fire for being the instigators of BTCs large market swings and seemingly unlikely corrections. Leaving many fearing the day that major crypto investors pull the plug, leaving the joke on us.
How to Profit From Them
While these concerns do have their place within the market, and no investor should ever dump in money that they’re not ready to lose to the grim humor of fate, many of them are incredibly shortsighted and far too cynical. Feeling a bit weighted in favor of legacy finance that is indeed floundering.
No Fees, No Gatekeepers, No Bottlenecks
Many of these “risks” are simple associated with the fact that it’s believed Satoshi Nakamoto, the creator of Bitcoin, never intended the coin to be treated as a store of value. Instead, as a digital currency system, one that was more accessible to the global community. A place where any type of investor could come onto the network, purchase bitcoins, place them into their digitally secured, free wallet, then transact them across the world– for little more than a mining fee. Despite the fact that this system is still very much alive and well today, using bitcoin as both a store of value and a currency can help anyone who deals with cross-border transactions to protect their assets and profit margin. Without needing to pay intermediaries, transaction, or exchange fee.
Day Trading and HODLing
Yes, bitcoin is still wildly volatile. Although the coin has stabilized in price in that last year, it’s still subject to some pretty incredible highs and corrections. But this is fantastic news for day traders, not only because it could serve to make them a great deal of money overtime– but also because the network itself acts as a crash course in day trading. With Bitcoins exaggerated gains and losses, it’s much easier to get comfortable with the fundamental principles of trading. It can also function as a spectacular lesson in learning when to hold out for better prices, dealing with that pesky FOMO, and raking in the cash once your patience pays off.
Know Your Market
The best way to avoid any crypto scams is to familiarize yourself with the market you plan on engaging with. This means reading up on how cryptocurrencies work, how best to invest them, and always closely following any advice that your exchange may give you. There are a number of resources available on how to avoid extortion and manipulation– think you’ve got a great handle on it? Publish your own tips and tricks and engage with the crypto community. You never know, there might just be some money in it for you.