The Downsides of Bitcoin

We’ve all heard the success stories of investing in Bitcoin. But for every success story involving Bitcoin, there are ten where failure is the overarching theme.Before you go running to find out the price of Bitcoin, you need to know that it isn’t all sunshine and roses. Let’s look closer at those reasons so that you can make the best decision possible with your investment.

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Cryptocurrency is Volatile

The first thing that most investment professionals will talk about how volatile Bitcoin is. Sure, Bitcoin hit some pretty staggering highs, but it has also had some massive valleys to go along with the ride.

It wasn’t all that long ago that Bitcoin was going for more than $64,000 per coin. That price fell quickly, and it now hovers at around $26,000. While that is still pretty valuable, investors in Bitcoin can tell you about the massive rises and falls that come with investing in Bitcoin. Now imagine what happens with cryptocurrencies that don’t have the same backing. There have even been some lesser coins that have collapsed within a single day and disappeared never to be seen again.

Still Unknown

People have been investing in Bitcoin for a while now, but in the grand scheme of things, it hasn’t been that long. Even though people have been talking about it for a while, Bitcoin was only created in 2008. That’s 15 years, which is nothing when you consider the investment history of a product.

Most of the altcoins that you see out there have been around for far less. Given that some of the world’s stock exchanges have been around for centuries – the London Stock Exchange was created in 1801 – 15 years is a minuscule sample size comparatively speaking. It is going to take some time before cryptocurrency has the established history that those other investment types do.

It Takes Time

There’s a lot of misinformation about cryptocurrency, especially Bitcoin. People think that it is common to make a huge windfall practically overnight. And while that’s happened to a few, it definitely isn’t common. That kind of mentality will lead to losses more often than not, costing you a lot of money in the process.

Coming out ahead in the cryptocurrency market takes time and effort. The most successful holders of Bitcoin probably got in early when it was next to nothing to invest in. When it started to hit incredible highs, they were able to get out at 40x, 50x, and 100x, if not more. That just doesn’t happen overnight. Thinking in the long term is the best way to go, but you have to have the patience to take that kind of strategy.

There are Still Security Risks

A big selling point of crypto is the encryption technology used by blockchain. But that doesn’t mean that all aspects of crypto are safe. The quickest and easiest way to get started is with an exchange. But they are prone to security hacks, putting any of your investments at risk if you keep your wallet on the exchange.

Being a cryptocurrency owner, you will be at risk of a potential attack if you use an exchange. Crypto owners can keep a cold storage wallet – meaning that it is kept offline – to minimize those risks but it isn’t foolproof. There have been plenty of security breaches with noteworthy exchanges, resulting in millions of dollars lost.

There are perks to investing in crypto, you just have to make sure you are prepared. Bitcoin can be a hugely valuable investment if you keep yourself protected.