TheCryptoUpdates
Guest Post

WHY SHOULD YOU BE CAREFUL WHEN USING BITCOIN?

BTC

Cryptocurrencies have continued to gain global recognition, and bitcoin taking the largest market dominance is often regarded as the King of the market. This is because the price actions of bitcoin determine the overall direction of the crypto market. 

There are several benefits and monetary solutions that Cryptocurrencies provide over traditional fiat currencies; however, there are some grey areas which I will be discussing in this article. I want to introduce the dangers of Bitcoin as I take you on a journey down memory lane. 

By the end of this article, the risks of bitcoin will be clear and should be a guide for your future asset management. 

First, in case you just heard of bitcoin for the first time, I will give a brief overview: Bitcoin is a virtual currency that has gained popularity over the past decade because of its fast remittance, settlement speed, and low commission. Transactions on bitcoin network work based on a unique technology known as blockchain technology. 

Now that you know what it is, let’s talk about the risks in Bitcoin. 

Volatility 

Bitcoin is considered profitable by a lot of people because of its price volatility; at the same time, this is a big disadvantage, especially if you are not a full-time day trader that pays attention to price action daily. 

You can suffer serious financial hurt at any time. Therefore, it is important to recognize these risks at an early stage and pay attention to the market status of Bitcoin daily if you must invest or store cash in the currency. 

Price manipulation 

This is another dangerous aspect of bitcoin as It is said that investors hold 40 % of Bitcoin issuance, so when we are trading, we are trading the remaining 60%. 

Now, assuming the investors who own 40% sell their Bitcoin all at once, this is what will happen to the price of Bitcoin; There will be a surplus supply of bitcoin flooding the cryptocurrency market, and the price will be severely affected negatively. In other words, 60% of bitcoin holders will suffer severe damage. The investors can then buy their coins at a much lower price. Therefore, You should always keep in mind that there are risks to your assets. 

Exchange hacks 

This challenge isn’t peculiar to Bitcoin alone, but since the introduction of cryptocurrencies, exchange hacking has not stopped. 

Every exchange tries to keep an up to date security apparatus, but it’s herculean to catch up with the amazing technologies that hackers employ. If exchange goes bankrupt due to hacking damage, all the assets on the exchange will be lost. 

So, instead of holding a large amount of bitcoin on the exchange, try to keep it in a cold wallet or use other exchanges to spread the risk. 

A collapse of the bitcoin bubble 

Bitcoin had risen from just a few cents in 2009 when it was first launched to almost 10,000$ today, 

However, since cryptocurrencies do not have an “investment index,” we do not know if this is a bubble, but we should be concerned about the collapse of the bubble because this situation is similar to the “tulip bubble” that occurred in the 17th century. 

When the tulip bubble collapses, the price plummeted to one-hundredth of its peak, so much care must be taken, especially when the price of bitcoin is rising.

Its use in the dark web 

According to research, more than 10% of bitcoin transactions are taking place on the dark web. The dark place is an illegal side of the internet, where many criminal activities and transactions are facilitated and carried out. 

Bitcoin is the major currency that is used to carry out illegal deals on this dark web such as money laundering, kidnapping, and human trafficking. 

Most Crypto newbies may not know about some horrible incidences that have occurred in the past in Cryptocurrency market, especially with Bitcoin, in particular. Below are some popular historical events that took place in cryptocurrency.

Mt Gox Scam

Mt Gox was a cryptocurrency exchange that used to be in Japan. In 2017, a huge amount of bitcoin disappeared at Mt Gox, and it was reported that the cause was an attack by hackers, however, subsequent investigation revealed that the president of Mt Gox committed the crime and he was arrested. 

Money laundering 

There was a money laundering crime reportedly committed by one Hilmi Git, who was using Bitcoin to launder money earned with more than 800 credit cards. It was said that fraudulent transactions with cards were up to the tune of more than $ 280,000, and occurred over 10 years. 

How you can stay safe 

It is believed that transactions on the bitcoin blockchain network are anonymous; however, it is rather pseudonymous because it operates as an open ledger, which means that anyone who had access to your wallet address can track your past, current and even monitors your future transactions. 

This is akin to making your bank statement of account assessable to the public. Quite an unsafe thing to do if you ask me. This risk can be mitigated by using SMART MIXERS to provide an extra layer of security for your Cryptocurrency assets. 

From the above, you need to safeguard your bitcoin, and other Crypto assets so that you do not end up losing them to a fraudster and every other scenario, as mentioned earlier, that can expose you to the dangers of losing them.

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