Is Bitcoin A Safe Cryptocurrency To Invest?

There is quite a talk in the financial markets about Bitcoin and other cryptocurrencies for their volatile nature. It raises doubt in investors and new enthusiasts to think whether Bitcoin is a safe financial platform to invest in or not. This is something quite obvious and relatable. Bitcoin is widely circulated and needless to say, has the highest market cap. But is bitcoin a safe cryptocurrency to invest in?

This article will explain how bitcoin and blockchain tech actually help to solve many financial security issues and ensure a smooth digital currency platform.

TABLE OF CONTENTS​

What is Bitcoin?

Is Bitcoin A Safe Cryptocurrency to Invest?

- Safety In terms of Technology Stack

- Bitcoin Security and Investing Issues.

Should You Invest In Bitcoin?

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What Is Bitcoin?

Bitcoin is a digital currency that was developed in 2009. It is a decentralized, peer-to-peer transferable cryptocurrency without the need for any intermediaries. There are no physical bitcoins. The digital records are kept in a digital ledger across different servers. Being the pioneer in the world of cryptocurrencies, it holds the largest market cap. We recommend you to have a look at this article for an in-depth understanding of bitcoin and its history!

Is Bitcoin A Safe Cryptocurrency To Invest?

Safety In Terms Of Technology Stack

Let us understand the technology behind bitcoin that contributes to its security and safety as compared to other financial platforms.

• Bitcoin Uses Blockchain And Cryptography

Bitcoin uses cryptography and blockchain to secure the platform and its transactions. It is immutable and requires validations for every transaction to come into effect. Blockchain is simply a chain of blocks linked to each other. We append any new transaction. We cannot change the previous blocks. A new transaction cannot replace any other. It has to be a new block in the chain. Moreover, it uses hash functions. It ensures that every transaction is unique which further ensures no duplication of bitcoins.

• Bitcoin Is Decentralized.

We don’t have any centralized transaction in bitcoin unlike financial institutes or any bank. Rather, it is distributed across a network of servers. This distributed network holds the entire transaction data. It allows for transactions to happen without the use of any intermediary: a peer-to-peer network. Decentralized simply means that all transactions are recorded and viewable by everyone. Don’t be afraid, it doesn’t mean it is not safe. It simply means that all transactions are linked to each other. Any hacking attempt would be pointless and other blocks will help to prevent it.

• Bitcoin Is Public

The transactions in bitcoin are viewable by everyone. They are recorded in a distributed public digital ledger. This may sound a little unsafe, but it is not. While buying or selling bitcoins, we do not add our personal information like passwords, credit cards, etc. We simply rely on cryptography and hash function to buy and sell which is immutable and prevents any confidential information from the leaked.

Bitcoin Security And Investing Issues

As they say, every cloud has a silver lining. Bitcoin also faces some security issues along with a secure technology stack. It can also be the least preferred asset to invest in by some investors. Let’s understand a few of them here.

Unlike other fiat currencies and assets, bitcoin is volatile. We can experience huge fluctuations within weeks, days, or even hours. If you are looking to invest in something concrete with safe returns, bitcoin may not be for you. There may be situations where the value rises and you earn huge profits. On the same day, the value may fall to the lowest imaginable numbers.

• Bitcoin Passwords Of Crypto Wallets

Blockchain secures bitcoin and we cannot hack bitcoin stack as such. But the passwords to the crypto wallets are something one can forget. As discussed, we have no intermediary and a central authority for assistance. This is quite risky and will lead to huge revenue loss. You may use a password manager or try something different to ensure you do not lose it.

• Bitcoin Scams

There are a number of crypto crimes related to bitcoins wherein, scammers try to request fraud payments in cryptocurrency. They even try to send unsolicited offers for generating huge profits for you or to increase your holdings.

• Fake Initial Coin Offerings (ICO)

Just like we have Initial Public Offerings in Stocks, we have ICO – Initial Coin Offerings for initial investors to invest their money into cryptocurrencies. But many cases have been reported of fake coin offerings where investors were lured to invest in a crypto coin that does not even exist.

Should You Invest In Bitcoin?

Just like any other digital currency and its platform, this also has its pros and cons. If we compare the crimes related to other fiat currencies and assets, they are no less. Certain methods to hack may be different and unique in the case of cryptocurrencies. But it shouldn’t be refraining us from investing at all. If we keep a close watch and follow the security protocols, bitcoin may be a great digital asset to invest in. However, it is up to you to decide whether to invest in bitcoins or not. Thorough research on one’s end is something that is recommended when it comes to investing.

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