“Is Bitcoin safe?” is a frequently asked question when people plan to invest in the digital currency market. Therefore, this article is here to help you find the answer.
This article will attempt to answer: Is Bitcoin safe?
Bitcoin is a sub-type of digital currency that was created in 2009. This is the very first coin that applies Blockchain technology and also started the era of blockchain-based digital currencies. Bitcoin, along with many other cryptocurrencies later, has a major difference compared to traditional currencies, which is decentralization. By this mechanism, Bitcoin does not rely on any central organizations such as banks or monetary authorities. This feature makes Bitcoin become popular very quickly, as its usage has eliminated completely the complicated procedures of using government-backed currencies.
This benefit also becomes the weakness of Bitcoin when talking about legalization. Because it lies outside the control of monetary authorities, many governments are either very hesitant or very strict to recognize Bitcoin usage as legal. Therefore, its legal status is inconsistent and varied in different countries.
The fact of not being control by any government or organization leads to the biggest concern of investors, “is Bitcoin safe?”. Is there any case that one day, the money of investors puts in this digital money will be lost forever and users will not be compensated for the loss? The rest of this article will discuss this concern in two aspects: Security and Investment.
Is Bitcoin safe to hold?
The security aspect is simply understood as whether Bitcoin can be easily stolen from user’s account; whether its usage is untraceable or Bitcoin holders’ identity will be completely safe from being hacked. The answer will depend on several factors.
Is Bitcoin safe for storing and holding user’s identity?
#1. Bitcoin is encrypted in the blockchain
Bitcoin is encrypted in the blockchain. By doing so, the amount of Bitcoin in the user’s account will be locked inside and protected not to be stolen. This means that it is nearly impossible for hackers to withdraw Bitcoin from the user’s wallet without achieving their consent, like sometimes happened with bank accounts or other online payment methods. Therefore, unless the user loses the private key that provides the access to their wallet, no one can enter unauthorisedly to the inside and take the money away.
#2. Bitcoin is decentralized
Decentralization eliminates the role of central authority. It means that all users in the network share equal responsibilities to keep track of all the transactions and other confidential information of users among the network. Therefore, if someone wants to steal anything from the network, like Bitcoin or the user’s data, he/she needs to successfully hack into the whole network, which means all the nodes in there have to be under his/her control. Otherwise, hacking a single node will not make any sense, as the rest of the system will prevent outsiders from taking anything out. This feature adds an extra layer of protection to users’ digital assets.
#3. Bitcoin is not anonymous
It is true. Bitcoin is pseudo-anonymous. Investors may think Bitcoin is an anonymous coin because none of their personal information appears in the transaction. However, it is not enough. All of the Bitcoin transactions are recorded forever in a blockchain, or called a public ledger. This ledger allows all the nodes to see any transaction happened in the network. By revealing the wallet address of users, date, time, and the funds spent in the transactions, Bitcoin makes it easier for hackers to track down trader’s confidential data in the blockchain, such as IP address, transaction history and even the amount of crypto they are holding. Therefore, in spite of not being controlled by authorities, Bitcoin user is put under the threat that their identity and digital assets may be pried by any random stranger in the network.
To sum up, it is great to know that no one can gain the access to an account without having a private key and steal the money secretly, however, the personal information of users is impossible to keep in anonymity. Therefore, there is no absolute yes or no answer to the question “Is Bitcoin safe” in this case. Bitcoin itself is secured but other safeguard methods are also required to maintain the privacy of users.
Is Bitcoin safe to invest?
Another aspect that most investors concern about when asking “is Bitcoin safe” is whether Bitcoin is a good investment. Good investment is meant to be stable and predictable. No one wants to invest in a commodity of which the price is fluctuated strongly and unpredictably. Unfortunately, this is the case of Bitcoin investors, due to the volatility characteristic of this coin.
Is Bitcoin safe to put money in?
How volatile Bitcoin is?
The price of Bitcoin can be changed rapidly, go up and down dramatically like a roller coaster without any rules or patterns to predict. For example in the period of 2013 to 2018, the Bitcoin value drop by at least 22%, in which the two records declines were 52% and 59% in 2014 and 2015 respectively. Additionally, to prove how strong Bitcoin volatile, the analysts compared how it fluctuated to other types of assets by the Bitcoin Volatility Index (BVI), which examines the price volatility of this coin in the US dollar in a particular period of time. The results indicate that the stock indexes and gold tent to have a standard deviation of 1% and 1.2% correspondingly, whereas, BVI was more than 4% in the same measured period of time.
Why Bitcoin is so volatile?
This coin is not controlled by any government or authorities. Therefore, there is no operating mechanism and monitoring applied to control and stabilize the price when a crisis happens. As a result, Bitcoin price is purely based on the buy-sell cycle of users. Due to the lack of economic regulation interference, Bitcoin becomes more vulnerable in comparison to other assets. Hence, its price is easier to fluctuate in response to any news event in the world. Positive or negative events will lead to speculation or sell panic in the market, which makes Bitcoin price change accordingly.
In closing, it may not be a preferred answer to the question: “is Bitcoin safe to invest”. There is an undeniable fact that Bitcoin investors may be put under higher risk and the potential loss may be more severe in comparison to other investment types. However, no risk, no reward, and actually, there is no investment without risk. Users should keep vigilant eyes on the market to minimize the risks and losses, as well as being beneficial in the long term. Sometimes, the return is beyond the user’s expectation, that’s why despite some drawbacks, this coin still exists and develops rapidly today.
Is Bitcoin safe? – Yes, and here is the solution
When discussing the answer to “is Bitcoin safe” question, we may note that Bitcoin is not absolutely safe or unsafe. It still possesses security features that are supposedly more superior than traditional currency. Therefore, to optimize the potential of this digital currency, it is always recommended to add additional protection layers. One of the popular solutions is using a privacy wallet, such as Incognito Wallet, to store and trade Bitcoin.
With Incognito Wallet, investors won’t need to ask “is Bitcoin safe?” anymore
So, how does a wallet make differences? The answer lies in the privacy-focused features that Incognito Wallet offers to its users. By verifying transactions between users without disclosing any personal information thanks to the Zero-Knowledge technique, this wallet allows users to store, buy, and send Bitcoin in complete anonymity. This overcomes the disadvantage of the traceable transactions of Bitcoin and then, all user’s personal information is hidden away from the third parties.
It is very simple to use. The “Incognito mode” is easily turned on when users want to use Bitcoin anonymously. This mode allows the wallet to connect to the public blockchain via an independent gate and issue a privacy version of Bitcoin in exchange for the original coin at the same value. Users can use these privacy coins for the transactions, in order to send and receive Bitcoin in anonymity. With Incognito Wallet, privacy issue in trading Bitcoin is no longer a worry for investors.
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