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The Risks of Bitcoin

Bitcoin Risks That Investors Should Be Aware Of
One risk is bitcoin’s volatility.
Everyone is aware of how volatile bitcoin is, and those who invest in it will watch its value swing substantially. Unless you can handle the ups and downs of bitcoin, investing in it is not for you. There is nothing to gain if the loss of your money causes you to sleepless. I cannot emphasize enough how important it is to use your discretionary spending money to invest in the Bitcoin market.

What exactly is discretionary spending?
It refers to money spent on travel, dining out, entertainment, hobbies, and sports.
You would never spend your rent money or money put aside for retirement on amusement such as a day at the races, so why should you use it to play the bitcoin market?
Hacking is a risk number two.
“Cryptopia,” an online bitcoin trading platform, retained money invested in Bitcoin. It was hacked, and all bitcoin investors with cryptopia lost their money. There were several heartbreaking instances of people losing enormous sums of money.
It should go without saying that you should never gamble with cryptocurrency money that you cannot afford to lose, or put too many eggs in one basket, as many of these investors seem to have done.
Another point to mention is that the real amount of money lost by cryptopia investors is likely to be drastically exaggerated owing to bitcoin’s soaring price. If someone invested $1,000 in bitcoin and it increased to $10,000 in a few years, only to lose the whole amount. It will be recorded that this individual lost $10,000 when, in reality, they only lost $1,000.
Three threats–lost passwords
An Australian guy is unable to access his bitcoin wallet because he cannot recall his password. If he makes 10 unsuccessful login attempts, the website where he stores his bitcoin will permanently lock him out of his wallet. He’s made eight so far. He has more than $300,000 in his bitcoin wallet.
The lesson here is to write down your password and store it in a secure location.
Another piece of advise is to diversify your investments so that you do not lose too much in one shot if everything goes tragically wrong.
Government restrictions on risk four
Governments have the authority to prohibit cryptocurrency trade; China has done so. Several Chinese government entities have joined forces to prohibit what they call “illegal” cryptocurrency activities. This is not to indicate that other nations will follow suit, but it does demonstrate that governments do have the authority to do so.
Taxation is a risk number five.
Death and taxes are the only certainties in life. You can be certain that the taxman will want a slice of your bitcoin pie at some time. Whether it’s a Capital Gains Tax or the higher value of bitcoin. It should be noted that if you are taxed on your bitcoin’s capital gains, you may be able to seek tax relief on any capital losses. A qualified accountant can help you with this.
Whatever kind of capital gains you invest in, keep in mind that while there is the prospect of capital gains, there is also the risk of capital loss. Investing in cryptocurrencies is dangerous, and it cannot be overstated that the money you invest in bitcoin must be money you can afford to lose.

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