Satoshi Nakamoto created decentralized digital assets with a simple whitepaper and a lot of courage.
In 2009, the world was just recovering from one of the most detrimental economic collapses in history, which would shape the future.
After Bitcoin appeared, every investor who had previously tried their luck with stocks and bonds turned to this revolutionary financial asset, as they could mine or invest it to gain portfolio value.
At that time, Bitcoin’s prices were much more affordable, and miners required no more than a regular PC to mine the cryptocurrency, but things have changed since then.
The demand for BTC amplified when more crypto projects landed on the market, as developers aimed to create a less expensive and complicated version of Bitcoin.
Hence, altcoins appeared, and now they’re potentially equaling Bitcoin’s value altogether. Litecoin, Ethereum, and Tether are famous examples of cryptocurrencies that have developed over time.
Due to its popularity and high demand, Bitcoin has become riskier for beginners by the year. But can these financial hazards be managed?
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Navigating regulatory challenges
Bitcoin is decentralized, meaning no official institution is required to manage it.
The asset lives on its blockchain, maintained safe and functional worldwide by miners, nodes, and validators.
Hence, since governments are not involved, they also find it challenging to regulate it based on traditional financial principles.
It has only recently been agreed that Bitcoin is a commodity and, therefore, can be subject to appropriate laws.
According to the Howey Test, cryptocurrency is an investment of money and includes expectations of profits. Overall, Bitcoin matches the criteria.
Still, governments are skeptical about Bitcoin’s safety and future usability, considering its high volatility spikes.
The cryptocurrency can hit rock bottom in a few days, and there would be no coverage for investors, so previous savings and strategic movements can become obsolete.
Therefore, how can we withstand changes and regulatory uncertainty?
As an investor, finding balance for your investments means being in for the long run and having consistent funding. This strategy will help mitigate price changes.
Protecting assets against security risks
Nakamoto designed Bitcoin to be highly secure, based on cryptography technology, blockchain, and decentralization.
Since there would be no intermediary that could compromise the network’s safety, we could assume that working with Bitcoin is safer compared with fiat money.
Unfortunately, Bitcoin is no stranger to security risks, especially regarding exchanges being hackers’ targets.
We will never forget about the FTX situation, which brought significant losses to most investors.
Still, this isn’t an isolated case because many exchanges were the targets of hackers who stole a lot of money and compromised their brand image.
Crypto exchanges are exposed to malware and operational glitches, which are not that simple to mitigate, considering the nature of these platforms.
Exchanges also offer wallet services, which poses a significant risk for investors.
Hence, a proper solution to mitigate the issue would be to choose hardware wallets to keep cryptocurrencies or non-custodial ones that don’t need the intervention of a third party to operate properly.
Recovering access to portfolios and lost assets
Regardless of its form, money can easily get lost or compromised.
This is also the case with Bitcoin and other cryptocurrencies. Wallet holders must carefully safeguard their digital keys because the funds are forever lost if they misplace or forget them.
It’s already known that millions of Bitcoins have been lost from people’s ownership due to forgotten passwords, but many other unfortunate circumstances can contribute.
Many people have lost many Bitcoins over time, which can be upsetting given the effort required to gather a more significant sum.
While protection against theft and hacks is more straightforward, what can investors do to protect their assets from negligence?
The best method to secure the private key is to use a hardware wallet.
The device looks similar to a USB drive and doesn’t need an internet connection to secure it.
You could also try multi-signature wallets that require two or three steps to authorize the transaction.
Getting used to the system’s complexity
Compared to traditional finances that offer user-friendly interfaces, blockchains are slightly more complex to navigate.
At the same time, exchanges and trading websites require some navigation to understand their work.
Moreover, grasping the concept of cryptocurrency is still new to our world, which may also be why so many people are not successful investors.
These new concepts have challenged people since the beginning due to the massive amount of information needed to operate them properly.
Ideally, everyone working with Bitcoin and crypto, in general, should invest more time learning about them and studying whitepapers.
Seeking support from more experienced investors will also help comprehend how these coins work, their security needs, and investment strategies.
Fearing the uncertain future
Bitcoin has been on the market for quite some time, but its future is unsure in light of current regulations.
Even though demand is high, the cryptocurrency’s volatility poses numerous challenges to investors, while climate change issues might cause governments to avoid regulating it.
Bitcoin has always been unsettled, although people have used it and pushed its boundaries of acceptance.
It’s hard to say when it will be adopted, but it’s already identified as a commodity and is quite widely expanded, so we can say that it has the potential to become the world’s first crypto legal tender.
However, the uncertainty around the subject might make investors prone to FOMO and anxiety.
So, the best thing we can do for now is maintain our investments for the long term and be up-to-date with the latest market developments to be prepared for any unforeseen situation.
What’s your take on Bitcoin?
Bitcoin’s popularity took over the crypto years, even years after its release because it proved stable and had long-term value.
Still, as a new asset, it’s not risk-free. Bitcoin has few system vulnerabilities that expose investors to losing their money.
Moreover, since Bitcoin is not regulated, people cannot recover their coins, and they might not even know if the investment is worth it for the future.
Still, we can navigate these challenges and remain patient with what’s in the store for Bitcoin.
