Honeywell home wall appliance

Is It Safe To Use Bitcoin?

Bitcoin use is on the rise, and as with any other currency, you need to be aware of potential risks. You may ask yourself, “Is it safe to use bitcoin?” But in reality, you just need to be sure you have the information you need to make an informed decision.

If you are wary about dipping into the pool of crypto-trading, you aren’t alone. More and more people are coming forward with concern in this type of trade. In fact, since 2016, cryptocurrency crimes have increased exponentially. Hackers are stealing investments and scam artists are rampant.

Additionally, many people still think bitcoin is more of a fantasy than actual currency, but this can’t be further from the truth. As an open-source network, at any given time hundreds upon thousands of programmers, mathematicians and tech-savvy investors are helping to develop and secure it.

When bitcoin was created, it was intended to promote personal freedoms and financial inclusion, so it makes sense that many bitcoin developers do it for free and in their spare time.

In spite of criminal activity, bitcoin is one of the oldest forms of cryptocurrency and is widely held as a safe investment. However, its market volatility has given investors pause.  In the end, it is the security of blockchain technology that has increasing numbers of investors flocking to invest.

So the question of whether bitcoin is safe really lands in the arena of how you secure your assets.

So, is it safe to use Bitcoin?

Here is the nitty-gritty on what you need to be aware of if you are planning to invest in bitcoin.

  • Bitcoin is a currency, first and foremost.  It is not immune to fluctuations in value.
  • Bitcoin is an unpredictable investment. This is not your average “safe” investment that guarantees steady returns. This is an up today, down tomorrow type of investment.
  • Deciding to Invest Means Trusting a Decentralized Network. You need to remember that this form of currency is not government regulated, so there is little or no recourse if things go south.
  • Managing Bitcoin Security is Key to its Safe Use. In spite of risks, if used and stored properly, bitcoin has been proved to be a reliable source for electronic payments.

Things to Know Before Buying Bitcoin

There are a few more things you should know if you’re interested in buying Bitcoin:

  • Bitcoin is just one of many cryptocurrencies, but it is the best known and most widely used.
  • Payments by bitcoin are final. If you get a decimal point wrong, you’re left to the receiver’s good nature to recover your losses.
  • Payments by bitcoin are not going to have the same level of protection, as the convenient recovery options if you suffer losses or fraud.
  • Trading accounts may not be covered by insurance. The SIPC, a financial oversight insurer that handles brokerage trading insurance, does not have insurance that covers the bitcoin trade arena.
  • Diversification is a key way to limit your risk. Just like the old adage of putting “all your eggs in one basket, “relying on one investment like bitcoin to support your entire retirement strategy is not wise. Your portfolio should include a range of high-risk and low-risk types of investments for a good mix.
  • Scammers are hip to the latest trends. The more bitcoin is used, the more chance scammers have to learn ways to fool the unsuspecting. Beware of unsolicited offers to make money overnight, especially when they ask for crypto payment upfront.
  • Fake initial coin offerings (ICOs) are easy ways for scammers to steal your money. Another popular scam involves a false opening of coin offerings. Much like when a company goes public and offers IPOs, ICOs are a way to get the word out to investors that a new form of cryptocurrency is launching. Scammers mock an ICO and can walk away with tons of your money if you aren’t careful.

How Do I Protect My Bitcoins?

There are a few steps you can take to ensure proper security for your bitcoin investments.

  1. Firstly, consider storage options. Since bitcoins are stored electronically through a digital wallet, the only security is the “private key.” This is like taking care of your birth certificate; you don’t want it falling into the wrong hands.
  2. Your digital wallet storage options are many. Take your time choosing a wallet that fits your needs. Research how long they have been around and whether they offer online or offline storage.
  3. Protect your bitcoins when you spend. Again, since this is a relatively new form of payment, make sure you do your homework on any businesses offering to receive bitcoins as payment. A little research can save you tons of trouble and money in the long run.
  4. You can take advantage of integrated anonymity and privacy features using cryptocurrencies like Dash, Monero, and Zcash.
  5. Follow the latest news on bitcoin hacking and keep abreast of changes in scammer trends.
  6. Keep an eye on government regulation changes. As bitcoin becomes more and more popular, governments are beginning to more readily accept them as currency. Keep note of where it is legal or illegal to trade in bitcoin.
  7. Store your personal key offline. Many people are using a form of security offline called a “cold wallet.” This helps secure your access key from potential network security threats.

Using one or all of these methods can help keep your bitcoins secure. So, what is the bottom line?

Key Takeaways

Bitcoin has been around for over ten years and countless investors process thousands of transactions that never warrant scrutiny. But, just like the old adage says – “one rotten apple spoils the whole bunch.” Put simply, there is going to be a risk with any financial commodity, especially for those that remain unregulated. This isn’t to say it needs regulation, it just means that you need to do your homework before you dive into the investment pool.

The actual framework of the technology is robust enough to handle even the most sophisticated attacks and many third-party service providers have an interest in spreading negative insights about its use. See, these third-party providers want in on the game and have done so by making bitcoin investing sound so scary, that you NEED them to secure your assets. In reality, this is not entirely true and quite frankly it is very misleading.

As with any form of currency, you still need to protect your assets from risks such as price volatility, unsecure bitcoin storage, and unreliable third-party services. Any financial investment requires some level of education about the product purchased, and bitcoin investment is the same. Keeping up with the latest trends is a clear way to protect your investments.

So, go ahead, don’t be scared. Dip your toe into the bitcoin investment pond and see if it’s the right investment for you. With the development in bitcoin use still trending, there’s no telling what the financial landscape will look like in a few years, so best to keep up to date.

If you’re educated about risk and willing to take care in the protection of assets, your bitcoin investment should be as safe as any other financial investment.

Jason Conor Verified

Editor-in-Chief of the BitcoinWisdom site, I'm responsible for ensuring all the content on our website is accurate, relevant, and helpful. I am a cryptocurrency advocate and I have been following the crypto space since early 2012. I have written extensively about Bitcoin and my work has appeared in some of the most respected publications.

Latest News