We take a look at the principal risks and rewards of dealing with cryptocurrencies such as Bitcoin in the modern market.
Ever since Bitcoin and other cryptocurrencies launched some decades ago, they have grown into one of the most controversial topics around. On the one hand, cryptocurrencies offered end-users many perks such as anonymity and transaction speed. Still, on the other hand, they naturally stirred up a lot of criticism regarding the lack of regulation and potential abuse.
Regardless of all the controversy, cryptocurrency quickly caught on in many industries. The gaming industry is one of those in which cryptocurrencies are often used, especially by players living in areas where other payments to online gaming platforms are not allowed. It is only the lack of regulation that prevents highly reputable brands like Virgin Casino from introducing Bitcoin and other crypto payment options.
In this article, we take a look at some of the main risks of dealing with cryptocurrency, how serious they are, and how you can avoid them. As a user, you will want to weigh these risks against the benefits and make up your own mind on whether using cryptocurrency is right for you.
The instability in value is one of the main risks associated with using cryptocurrencies such as Bitcoin. While every currency out there can fluctuate in value, cryptos have been known to oscillate wildly. Bitcoin itself has gone up to over $10.000 per single unit and back down to $5.000 on multiple occasions, presenting a real risk to users who hold on to large amounts of the currency.
With all its wild ups and downs, Bitcoin has not even been the most volatile of cryptocurrencies out there. All of this means that users should refrain from holding on to large deposits of any cryptocurrency and should instead only purchase the amounts they need for their commercial use.
Those who are intent on investing in cryptocurrencies should be very careful as well, as the market is very unforgiving and often too volatile even for experienced traders. If you decide to go into trading cryptos, diversification may be one way to go as this allows you to suffer less at the swings of a single currency’s value.
Lack of Recognition
Digital currencies are relatively new on the market, and in most countries, they are not yet recognized as a legal tender and should thus not be used as a method of payment. The USA is leading this combat against cryptocurrencies that threaten to impact the value of the dollar, and the lack of acceptance is understandable in many ways.
Cryptocurrency can be used more efficiently to fund crime or terrorism than traditional currencies, which immediately makes it that much more dangerous. The lack of control and oversight over the digital money is what still keeps it on the margins.
No matter where you live, don’t expect to be able to use your digital currency to pay for anything you choose. In many countries, companies will stay away from Bitcoin altogether, while in others, the currency is accepted only by a handful of businesses.
Errors and Theft
Using cryptocurrencies to pay for goods and services comes with additional risk, and that one is related to how such transactions are made. Once you make a crypto transactions, there is often absolutely no way to get it back, and there is no one to complain to. If you entered the wrong bank account in your money transaction, the bank would help you out. If you enter the wrong crypto wallet number, the money may well be lost forever.
Finally, theft is a significant risk associated with cryptocurrencies, and once again, there is no one to complain to. If you get hacked, or your software or hardware gets compromised, it is very unlikely you are getting your digital coins back. However, good cybersecurity will ensure that you stay safe, so if you are going to be using cryptocurrency on your computer, make sure to protect it well.