Is Cryptocurrency Safe Investment 2022? Harsh Kumar

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Is Cryptocurrency Safe?: In the recent history of Bitcoin dip to 70% to 80% in a bear market in 2015. Regardless, Bitcoin has broken all-time high prices and continues growing year by year.

In 2010, a gentleman from Jacksonville, Florida, made the first real-world transaction with Bitcoin. He purchased two pizzas for 10,000 bitcoin. At that moment, that was a reasonable price for two pizzas. You already knew that was a big misfortune

If that man skipped his dinner or purchased his meal by cash or credit card.
kept his bitcoin, he’d be sitting on close to half a billion dollars worth of cryptocurrency today.

Is Cryptocurrency Safe?

Cryptocurrencies like Bitcoin, Ethereum, and others are built on blockchain technology. A blockchain is a decentralized distributed system powered by miners.
Bitcoin’s network has an evaluated 10 to 20 times the processing power of Google’s servers, making it one of the most secure networks in the world.

To hack a blockchain secure network, you’d have to control 51% of the miners on the bitcoin network at the same time because of proof of work.

Which makes security breaches practically impossible. However, crypto exchanges are still in danger of being hacked, and unless you store your crypto in a hardware wallet, you aren’t completely safe from bad characters.

bitcoin 2015
This chart is from coin market cap 2015

Although, blockchains are impossible to hack. Bitcoin and other cryptocurrencies are dangerous investments because it is highly volatile.

In the recent history of Bitcoin dip to 70% to 80% in a bear market in 2015.
Bitcoin lost 85% of its value in 2018.

That has been said, as more institutions and long-term players enter the market, the volatility is likely to reduce to a great degree.

Bitcoin and Ethereum are the most secure blockchain. But in the case of altcoin, it gets complicated.
Because security is directly proportional to the ability to take over 51% of the network.
smaller networks are smaller targets are seem vulnerable easy to manipulate, inherently less secure.

Is Cryptocurrency Insured?

Like other investments, investing in cryptocurrency is not guaranteed. Nonetheless, there are insurance options for some crypto-related investments.
For instance, coin cover offers insurance options to cryptocurrency wallets and exchanges.

If these companies use coin cover, their users’ cryptocurrency is insured for theft. In some cases, if they lose their private secret keys too.

Your private key is like a password for your crypto wallet that grants you access to it. There are also decentralized insurance options that can operate on the blockchain.
Nexus Mutual is a leading brand for decentralized insurance protocol that allows investors to buy a share of the insurance fund.

When investors buy the fund, they are issued Nexus tokens proportional to their share of the fund. The token’s price is valued mathematically based on the total tokens in the fund, the minimum reserve requirement, and the number of open insurance contracts.

Companies can use Nexus Mutual to insure their exchanges in the situation of a security breach.

Investing in Cryptocurrency

Most investors see cryptocurrencies as a long-term investment. Some investors also strongly claim they will never sell their cryptocurrency.

They think that crypto will replace gold and the current currency system.
However, cryptocurrencies have suffered through downtrends in bear markets, causing thousands of investors to lose 50% or more from their portfolios.

Regardless, Bitcoin has broken all-time high prices and continues growing year by year.
On the other side, some traders trade cryptocurrencies as a short-term investment. Some traders will even buy cryptocurrency tokens that don’t have any penny tokens because they think the value will rise regardless of the time.

Pros and Cons of Cryptocurrency Investments

Pros

  • The most significant advantage of investing in cryptocurrency is that it has huge potential.
  • If in the future, if Bitcoin replaces gold as a store of value. Each coin could be valued at over $500,000 (market cap of gold / total Bitcoins issued).
  • Some investors are estimating Bitcoin will reach $1 million, as it will be a better and more accessible store of value than gold.
  • Ethereum has an equal upside possibility. Anyone who wants to do a financial transaction with Decentralized Finance (DeFi) is required to pay Ether tokens for that transaction.
  • For instance, if you want to swap tokens on Uniswap, buy an NFT, you must pay a certain amount of transaction fee on the Ethereum blockchain.
  • Also, investors are locking up their Ethers to earn interest through DeFi, so Ethereum tokens will become scarce as more use cases applications are developed.

Cons

  • Cryptocurrencies are high-risk investments that can swing rock bottom to the sky or vice versa in a single day.
  • Some alt cryptocurrencies will definitely fail in the future and their tokens will be worthless. Investing in trusted coins like Ethereum and Bitcoin are normally securer investments than lesser-known coins, the cryptocurrency market is new there is the tone of scammers on market as well.
  • Since the blockchain industry is relatively new, So this sector is not regulated .before Investing does thorough research about that coin you’re investing in that has a good team and a solid foundation.

Conclusion

By historical Trends, cryptocurrency has been proven great investment over time. But yet, investing in cryptocurrencies is riskier than other assets like stocks, traditional commodities, and real estate. Perhaps Bitcoin will replace gold as a store of value, and Ethereum has the potential to change the entire financial services industry. Although enterprising, the growth potential for cryptocurrencies is unlike any other investment.

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