Crypto Currency is a new method of securing the financial transactions of your assets by using strong strong cryptography. it uses decentralized control of currencies. Bitcoin is the first decentralized cryptocurrency which was released in 2009.
1. Market volatility
There is a notable change in the value of cryptocurrency in 2018. Nearly there is 80 per cent fall in the value of cryptocurrency recently in January. It was worse than the dot com crash in 2000. The bitcoin market that peaks at $20089 have fallen down to $7000.
Thus there is huge volatility in the market. The huge risk involved in this sector. There is always a greater chance of loss over profit. Careful investment should be made into this sector. Without proper market research and analysis, one should not creep into the market. Any impulsive decision can end him up in bankruptcy.
2)Regulatory and legal issues
Regulatory and legal issues are the two biggest obstacles in this sector. Since it is a new venture the government and the banks have not formulated any fiscal policy and therefore there is a risk of changes in tax rates, rules etc. Thus there is so much risk involved. You cant be sure in various respects. Investing in such assets are riskier than any other capital investment.
There is a various number of bitcoins ranging from 1600 to 2000. In so many bitcoins, it creates confusion among investors. Whenever a person invests into crypto they think for the long term goals but in the presence of so many options, it becomes difficult to judge the probability of growth rate for various coins. Lesser the option, more certain are the decisions.
For every product and services, there is an assurance of consumer protection. But neither the bank nor the government covers any risk regarding this. Neither there is any regulatory body that can keep a check on it.
Sometimes it may become quite tough for people to understand the underlying mechanics of the market. The market manipulations are stimulated by a handful of investors with a large number of cryptocurrency. They tend to govern the whole market situation.
They basically raise the values of the bitcoin suddenly and then the rate falls again. They do this to allure people. Due to fear of loss of assets, investors sell or buy bitcoins at such situations but later gets trapped in this game. For a newbie it is quite difficult to understand these underlying mechanics this he must play safe.
5) NO SHORTCUT
Investing in bitcoins do not makes you rich overnight. There are stories of many investors who have turned millionaire overnight but the current scenario of the market is completely different. There has been a huge crash recently in this market. Thus it takes time to see you growing. It may take you years to make some reasonable amount of money.
6)ALL THE EGGS IN A BASKET
Many people due to lack of experience and knowledge invest all their money in one type of bitcoin. This can be highly risky because if the market of that bitcoin falls then the whole lot gets dumped. But when invested wisely into various baskets it is probably to make some money out of it. Putting all the money at a single place can mark the things worse. One can not say certainly about the market.
The rates may change overnight. Thus in such conditions taking such a risk can be fatal. Lots of people have to dump a lot of money who gets trapped into this trick so act wisely and save your money from getting dumped.
7) BITCOIN HACKING
Even in the crypto market, there is a high risk of hacking. Your bitcoins are always at risk of falling into the hands of these bitcoin hackers. Thus there must be a special security system built to protect you from these issues. One must call their service provider to make a two-step verification process for their number to get used. There are several companies that have suffered huge losses. Even the crypto experts suggest the investors build a robust security system to defend the attacks of hacking.
8)INITIAL COIN OFFERING (ICO)
The startup cryptocurrency offers initial coin offerings (ICO) and overrates their assets to allure people. They provide much misleading information regarding their coins and their assets.