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May 29, 2018

3 Risks Facing Bitcoin in 2018

by John_A

As an electronic currency, Bitcoin is often presented as both anonymous and perfectly transparent. As an investment opportunity, it was seen as one of the largest gold mines in 2017.  Still, many questions remain, namely in terms of risks, as Bitcoin becomes increasingly mainstream.  Answering these questions is extremely important for all cryptocurrencies as Bitcoin is the clear pioneer and frontrunner of blockchain technology.

This is what we would like to address in this article, looking at three major risk factors that Bitcoin will have to face down in 2018.  For those interested in more information, they can check out ExpressVPN’s Bitcoin: Ultimate Security & Privacy ebook.

  1. Hacking & Theft

Bitcoin hacks have received worldwide attention from small-time criminals hacking computers to possibly rogue government-backed attacks on major exchanges. It took the industry years to develop sound practices and properly take security into account because of the difficulties involved. This is because unlike traditional financial networks which can rely on trusted custodians, Bitcoin relies upon blockchain encryption.  This basically means users can only rely on themselves to secure their assets through the use of wallet technology.  Backups can further enhance this security.

  1. Regulatory Risks

However, risks facing Bitcoin are not exclusively technical or criminal in nature. When exchanging Bitcoin or investing speculatively, physical security aspects and compliance issues may need to be taken into account.  For example, lost of Bitcoin stored in hardware is a definite possibility that was played for laughs by American sitcom Big Bang Theory in November 2017, but is actually a serious issue.  Furthermore, regulatory changes and restrictions may also impact Bitcoin prices, with trade requiring counterparty and regulatory risk assessment for it to be truly safe.

  1. Systematic Collapse

Lastly, as Bitcoin (and all cryptocurrencies) are a new financial product, and one that lacks the backing of any trusted institutions, there is a risk of systematic collapse.  With its value based upon trust and provided by the masses, one must have to consider the possibility, however remote, of Bitcoin collapsing on its own.  It is also possible for governments, banks, or major institutions to simply flood the Bitcoin market with miners, forcing others out of business.

For answers to these risks and more, remember to check out Bitcoin: Ultimate Security & Privacy.


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