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Are you wondering whether you can lose the money you invest in Bitcoin? If so, this article explains how you can lose your Bitcoin investment.
Bitcoin is an excellent and profitable investment with its share of risks. Moreover, this virtual currency has had a turbulent time in 2022. The price of this electronic money dropped drastically in 2022 despite hitting an all-time high in 2021. This electronic asset has been on a downward trajectory after recording a high of around $65,000 in November 2021.
This virtual currency operates like regular currencies but with notable differences. For instance, this digital asset is decentralized, meaning no government or financial institution can regulate or manipulate its operations. Also, this electronic currency is purely digital and online hence has no physical presence. Bitcoin’s creator, Satoshi Nakamoto, created cash that gave its users great financial freedom. These digital money holders can access Bitcoins from their wallets anytime and trade this electronic money 24/7. This electronic currency also uses a peer-to-peer transaction network hence getting rid of third-party interference. Additionally, these virtual money transactions are fast, secure, and transparent, allowing anonymity.
Bitcoin has a higher return potential hence a profitable investment. However, you could lose your money if you are not keen when investing this electronic money. Here is how you can lose the money you invest in this digital money.
Despite this electronic currency promoting secure transactions, it is also prone to hackers. People store their Bitcoin holdings in digital wallets, and transactions occur online. Therefore, hackers can sometimes get hold of other people’s Bitcoins despite the security measures to prevent hacking.
For instance, in 2014, a Tokyo-based brokerage, Mt. Goxhad, filed for bankruptcy after hackers stole a significant amount of Bitcoin. Also, that is only one instance hackers managed to steal people’s Bitcoins. Ensuring that your Bitcoin holdings are secure is very vital.
Mainly, hackers target online brokerages as they have a massive population of investors. Therefore, avoid scams and work with open and dependable platforms. The exchange should have tight security measures in place. So, research the crypto exchange’s security to know how it protects your investment and ensures you are comfortable with the criteria. Compare the security measures with other brokerages before deciding the one trade with fully. You can create an account with Bitcoin Loophole to ensure security when trading Bitcoin. This platform has relevant platforms to provide customer protection.
There are two main types of wallets: a cold wallet and a hot wallet. Security-wise, a cold wallet is better as it is offline.
If you forget or lose your cold wallet’s password, you could permanently lose access to your Bitcoins. Also, if you have software wallet, you might worry about other people getting its password. For example, there was a typical case whereby a founder of a Canadian Bitcoin brokerage, Gerald Cotton, unexpectedly died. This founder was the only person with the exchange’s crucial passwords. Gerald’s clients could access the combined $250,000 million in their accounts with the password information. Such a scenario is very devastating.
When storing your Bitcoins, decide where you feel more comfortable. Both software and hardware wallets have their pros and cons. So, if you use a cold wallet, memorize or safely secure a list of your passwords that others cannot find.
These digital money scams are a common practice, with more people developing an interest in this virtual currency. Scammers give very enticing offers. Some of these scammers promise to offer insider investing tips. These scammers will create fake profiles claiming to be famous government officials or influencers like Elon Musk. Be aware of people claiming they can make you a fortune if you give them your Bitcoins to invest.
Bitcoin is a significant investment. However, remember the above tips to prevent losing money while investing in Bitcoin.