Risks of investing in cryptocurrencies
Bitcoin experienced its worst first quarter in history in 2018, falling from $13,412.44 to $6,928.85 in the three months to 31 March. Bitcoin, among other cryptocurrencies, are slowing down with market values expected to plummet further.
The highly volatile nature of cryptocurrencies means investors need to be aware of the risks before deciding to invest in digital currencies. Consider the following risks:
Market values can fluctuate quite dramatically as its value is based on its popularity at a given time. Regulatory threats and the likes of Google, Facebook and Twitter banning cryptocurrency advertisements recently can have all contributed to recent drops.
Cryptocurrencies are a lucrative market for hackers. Malware has been specifically created to steal cryptocurrencies, leaving the contents of your digital wallet at risk. Unfortunately, you cannot retrieve any digital currency which is stolen as it is not guaranteed by any bank or government.
No legal protection
In most countries, cryptocurrencies are not protected or recognised as legal tender. Additionally, the exchange platforms on which you buy and sell digital currencies are not regulated, so if the platform fails, you will not be legally protected.