What’s next for cryptocurrencies? Following the boom on the market, the cryptocurrency phenomenon stirs up the minds of many investors, and there are some good reasons for it. Experts believe in both opportunities and risks this new trend brings to us – and all of them are worth to be known.
Our today conversation is about cryptocurrency scams as well as factors of success which you can use to your benefit. Investing in cryptocurrencies can be a great deal if you have a safe airbag in reserve.
Cryptocurrencies become more and more tempting for entrepreneurs from every corner of the globe, and the dark attacker force feels it, preparing tricky traps. When talking about scams appearing here and there on the market, it may be not very clear what influence scams really have and how fast they spread. We turned to a source news.bitcoin.com to get relevant numbers on this subject.
Only during the first two months of 2018, the cryptocurrency scammers stole $1.36 billion. If this tendency remains by the end of the year, the stolen sum will become equal to the GDP of a small African country – what a good reason to always check the analytics of cryptocurrency scams!
Various cryptocurrency frauds are the biggest scam category (30%) in the general list.
According to Reuters, 980 000 of bitcoins have been stolen from coin markets since 2011. This number of bitcoins equals around $15-$18 billion at the present-day prices.
These three points are enough for investors to start worrying. But risks are an inevitable thing if you deal with financial operations. Spending time on worries is not our option – TecSynt suggests you gathering more knowledge instead.
These are the most important risk factors on the cryptocurrency market at the moment. You can’t limit yourself to the basic knowledge about the blockchain technology – go further and learn new tendencies. This industry is changing swiftly, so it’s better to regularly review some analytical materials.
1. Loss of the private key
Let’s start with some theory first. Any type of cryptocurrencies is stored in a digital wallet. Having control over this wallet is possible if you have two keys: a public and a private one. Needless to say, both of these keys are unique. The loss of the private key can deprive a wallet possessor of the access to his cryptocurrencies. This is the reason why stealing a private key is a common way for the third parties to get to the digital wallet.
2. Peer-to-peer transaction risks
As numerous cryptocurrencies appear on the market, more and more participants would like to take part in trades. Today, you may find a huge number of ways how you can buy a currency: using online platforms, turning to services of third-party suppliers, or via peer-to-peer transactions. The problem is marketplaces, where transactions are held, don’t provide customers with a sufficient data about a seller and a decent security level. It is a big risky trap where lots of investors are caught – for example, a currency you buy may be also sold to another client.
3. Loss of confidence in cryptocurrencies
Let’s face it – now cryptocurrencies are bought in order to gain some short-term or long-term profit. People haven’t got used to the fact that they can use digital currencies as any other financial resource in the trade industry. And we should not forget most cryptocurrencies are not regulated by any official institution such as a central bank. Instead, all prices for cryptocurrencies are formed by investors – the more they ready to pay the higher a price will be. So, a drop in the price is based mostly on the customers’ confidence.
4. Risks concerning currency conversion
There are many factors which eventually can influence the cryptocurrency conversion: complex banking operations, any interruptions in the deposit, or withdrawal of fiat money. For example, investors in Britain now face more complications when converting their currencies.
The thing is British banks have no relations with cryptocurrency exchanges, so entrepreneurs have to convert their crypto-assets into euros or dollars and then send them as a foreign transfer. And in the end, people have to pay a certain amount of fees – it all sounds quite fussy and pricy.
5. “Forks” within the blockchain
Peer-to-peer interactions during the cryptocurrency trades are regulated by certain protocols. If any disagreements appear concerning these protocols, it may lead to the “dilution” of the cryptocurrency. Let’s review an example.
In 2016, two versions of the Ethereum currency appeared: Ethereum and Ethereum Classic. Regardless two of them relate to one blockchain, they are traded differently. This is what we call a cryptocurrency dilution or “a fork”. In most cases, forks create confusion and technical challenges for investors, so it is still a risky matter.
These are the basic perilous aspects discussed by businessmen all over the world. But despite these cryptocurrency scam risks, people continue taking part in trades. What’s the secret of this growing hype? There is sometimes a reason to leave, but there is always a reason to stay…
Risks and opportunities are two halves of the same puzzle, so our conversation would be incomplete without mentioning some positive aspects of the cryptocurrency trading in 2018.
Scalability and liquidity are growing. One of the disadvantages of using bitcoins is its ability to cope with up to only 14 transactions a second. It is a tiny number comparing to credit cards, which usually handle thousands of transactions. The solution has come with second-layer peer-to-peer networks. Using them, you appear off the blockchain with an increased transaction speed and a decreased cost of this transaction.
Ethereum growth. Lots of cryptocurrencies are expected to grow in 2018, but the biggest focus is now on ether – this is the foundation of all ICOs (Initial Coin Offerings). As more legitimate offerings appear on the market, the demand for ether continues growing. We will eventually see ether’s increased price by the end of this year, and we won’t be surprised if it appears to be twice bigger than it is now.
More regulations to appear. Lack of management is a chance for all those attackers to steal more digital assets. But now we know that regulations on the cryptocurrency market are possible – the Japanese government showed us a great example. The market in Japan dropped at first, but the situation is established at the moment. This year, more countries will set their regulations, and it will hardly have a great damage on the market.
More chances to use crypto-assets. In order to make people trust the cryptocurrency phenomenon, new startups appear offering debit cards that help spend digital assets. It is another factor of an increasing number of buyers and sellers – people will be ready to pay more as they will eventually see what benefits they get.
Institutional investments. Money flows from the biggest market players are always a happy moment for any economic sector. The cryptocurrency branch also becomes a chosen one for solid contributions. The year of 2018 will be a new stage in the development of the cryptocurrency branch thanks to institutional investors.
As you can see, there are some counter-arguments to main cryptocurrency scam risks. With time, the market is taking shape and is able to offer confidence to its customers.
We’re all afraid of changes, especially when such changes involve risky investments. Nevertheless, cryptocurrencies are a very tempting goal for lots of entrepreneurs. The goal becomes achievable for those who research possible advantages and disadvantages – knowledge is everything on the new financial filed.
Today, we’ve looked through some essential data you need to know, but each new day brings new analytics to review. For the sake of your success, never stop searching and learning, and your benefits will soon become accessible.