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what is the risk of bitcoin

what is the risk of bitcoin

Oleh: Muh. Sabri Rahman Pada 2015-12-28 20:53:41

Saving your Bitcoin safely is very important. Unlike other types of money that are controlled by banks, Bitcoin gives you many options to save and control your money.
 
Remember about the private key that you need to move your Bitcoin? This key is the key to storing Bitcoin. The person who owns the key is the person who controls the Bitcoin. This key can be a digital or physical key as written on a piece of paper.
 
How do I save this key? You can store it in your pants pocket, but that is certainly not safe. You can put it in your home safe - which is much safer. But someone can just enter your house and steal it. If you want to use your Bitcoin every day, you need a digital version on your mobile so you can access it more easily. The only problem is if you lose your cellphone, then you lose your key, so there won't be a way to get your Bitcoin back.
 
That's why companies like Luno were founded - not only to make it easier for you to buy, sell and use Bitcoin, but to keep it safe. We do this by storing your private key in a bank's iron safe with access such as fingerprints and retinal scans. Not only one iron safe, but various iron safes on many continents. And we built this with a system that if someone wants to access it, you need keys from various iron safes and combine them to be able to take Bitcoin - just like in old movies, when nuclear submarines need three to five 'launch codes' from some generals before launching nuclear weapons. This is also called 'multisig' (multiple signatures required).
 
This method is a safe way to store Bitcoin, but you need to trust the person who saved this key. There are many reputable companies like Luno that you can rely on, but many also don't store your Bitcoin well, or pretend to save and abuse your Bitcoin. Unlike conventional money, you have many choices in saving Bitcoin - you can save it yourself, in digital or physical format, or you can entrust others to keep it for you (or a combination of several of these options).
 
The way Bitcoin is stored is one of the biggest irony of Bitcoin - the world's largest global digital currency designed to be used online, most of it stored 'offline' in bank safes and off the internet. Who knows!
 
Bitcoin is an interesting technology and new form of money, but this does not mean Bitcoin is independent of risk. Keep in mind that there are some same rules in Bitcoin like traditional money. For example, don't keep your cash under a pillow because it's easy to steal, or don't entrust your money to strangers.
 
Bitcoin also has another unique risk: for one person, Bitcoin is a new technology, and although it looks very safe and solid, there is always the possibility of failure. That's also why you can never enter ‘all your eggs in one basket 'and never buy Bitcoin with all your assets. Bitcoin is more volatile (the value of Bitcoin can go up and down in a short time or place) than other currencies, and even though the value of Bitcoin is more stable, Bitcoin will definitely experience many volatile moments in the future.
 
Remember that Bitcoin transactions are like cash where transactions cannot be canceled - so if you send a Bitcoin to the wrong person, or your Bitcoin wallet is hacked and someone steals your Bitcoin, it is very difficult and even impossible to take it back. Bitcoin is also not protected by any entity, so if you lose your Bitcoin, the service provider or 'Bitcoin network' cannot compensate you. That's why you have to use trusted products and service providers to help you, just like when you choose a bank to keep your money safe.
 
Finally, the value of Bitcoin is determined by a number of people or businesses that accept Bitcoin. If Bitcoin develops, this will be very good for Bitcoin, but if fewer people use Bitcoin, then this will have a negative impact on the price and use of Bitcoin itself.
 
In conclusion, Bitcoin is a great potential that is very interesting in changing the world, but make sure you understand the risks that go with it.