Can you lose the money you invest in Bitcoin?

Disclaimer: The Industry Talk section contains insights from crypto industry players and is not part of the editorial content of Cryptonews.com.

Are you wondering if you can lose the money you invest in Bitcoin? If so, this article explains how you can lose your Bitcoin investment.

Bitcoin is an excellent and profitable investment with its share of risk. Moreover, this virtual currency has had a turbulent time in 2022. The price of this electronic money fell drastically in 2022 despite reaching an all-time high in 2021. This electronic asset has been on a downward trajectory after registering a peak of around $65,000 in November 2021.

This virtual currency works like regular currencies, but with significant differences. For example, this digital resource is decentralized, which means that no government or financial institution can regulate or manipulate its operation. Moreover, this electronic currency is purely digital and online, and therefore has no physical presence. Bitcoin’s creator, Satoshi Nakamoto, created cash that gave its users great financial freedom. These digital money holders can anytime access Bitcoins from their wallet and trade this electronic money 24/7. This electronic currency also uses a peer-to-peer transaction network and thus gets rid of third-party interference. In addition, these virtual money transactions are fast, secure and transparent, allowing anonymity.

Bitcoin has a higher return potential and thus a profitable investment. However, you can lose your money if you are not keen on investing this electronic money. Here is how you can lose the money you invest in this digital money.

Hackers

Despite promoting secure transactions, this electronic currency is also vulnerable to hackers. People store their Bitcoin holdings in digital wallets, and transactions happen online. Therefore, hackers can sometimes get hold of other people’s Bitcoins despite the security measures to prevent hacking.

For example, in 2014, a Tokyo-based brokerage, Mt. Goxhad, bankrupt after hackers stole a significant amount of Bitcoin. There is also only one case where hackers managed to steal people’s Bitcoins. It is very important to ensure that your Bitcoin holdings are safe.

Hackers mainly target online brokers as they have a huge population of investors. Therefore, avoid fraud and work with open and reliable platforms. The center should have strict security measures in place. So research the security of the crypto exchange to know how it protects your investment and ensure that you are comfortable with the criteria. Compare the security measures with other brokerages before you decide which trade with fully. You can create an account with Bitcoin Loophole to ensure security when trading with Bitcoin. This platform has relevant platforms to provide customer protection.

There are two main types of wallets: a cold wallet and a hot wallet. In terms of security, a cold wallet is better since it is offline.

Loss of password

If you forget or lose your cold wallet password, you may permanently lose access to your Bitcoins. If you have software wallet, you can also worry about others getting the password. For example, there was a typical case where a founder of a Canadian Bitcoin brokerage, Gerald Cotton, died unexpectedly. This founder was the only person with the exchange’s decisive password. Gerald’s clients were able to access the combined $250,000 million in their accounts with the password information. Such a scenario is very devastating.

When storing your Bitcoins, decide where you feel more comfortable. Both software and hardware wallets have their advantages and disadvantages. So if you use a cold wallet, you need to remember or secure a list of your passwords that others can’t find.

Bitcoin Scam

These digital money scams are a common practice, with more people developing interest in this virtual currency. Fraudsters make very tempting offers. Some of these scammers promise to offer insider investment tips. These scammers will create fake profiles claiming to be famous government officials or influencers like Elon Musk. Beware of people who claim they can make you a fortune if you give them your Bitcoins to invest.

Final thoughts

Bitcoin is a significant investment. However, keep in mind the above tips to avoid losing money while investing in Bitcoin.