Why Some People Fear Bitcoin Investments (2024)

FAQs

Why are people scared to invest in crypto? ›

Most crypto coins have extreme volatility swings, complicated technicals and very little regulation. So, while there's an opportunity and people have become rich, many still hesitate to invest in the crypto market.

There are several risks associated with investing in cryptocurrency: loss of capital, government regulations, fraud and hacks. Loss of capital. Mark Hastings, partner at Quillon Law, warns that investors must tread carefully in crypto's unique financial environment or risk significant losses.

It is fair to say that without rigorous standards in place to regulate cryptocurrencies, there are still many risks associated with using them. World economics relies on strong currencies, so the idea of investing money in a concept that you fear could collapse, is never appealing.

Such a dramatically unstable market price puts Bitcoin closer to speculation than investing – something we are not in the business of. And, while some new cryptocurrencies are backed by so-called hard currency, there is little reason not to simply hold the hard currency directly rather than via cryptocurrency.

Cryptocurrency awareness and ownership rates have increased to record levels: 40% of American adults now own crypto, up from 30% in 2023. This could be as many as 93 million people. Among current crypto owners, around 63% hope to obtain more cryptocurrency over the next year.

Summary: As of 2024, there are about 420 million cryptocurrency users globally. Of these, approximately 1.5 million individuals possess more than 1 Bitcoin, which is just 0.36% of all cryptocurrency users.

If this pattern continues into 2030, the price could peak around 2029 or 2030, potentially aligning with Wood's price prediction. If Wood is correct and Bitcoin reaches $3.8 million, a $100 investment in Bitcoin today would be worth $5,510 in 2030. This translates to a compounded annual growth rate (CAGR) of over 95%.

Edelman stresses that bitcoin is highly speculative, with a history of volatility, but he believes its potential makes it appropriate for a long-term portfolio, provided that investors limit it to 1% to 5%. "The risks are high, and if it fails, a low single-digit allocation won't cause material harm," he said.

Bitcoin Undermines the Cycle of Trust

Its network is claimed to do away with intermediaries and, by extension, the elements of a government's system. Advocates believe that if cryptocurrency is adopted, a central bank would no longer be required. That is because crypto can be produced by anyone running a full node.

What is the biggest problem with Bitcoin? ›

Bitcoin's unstable value has also made it an unviable medium of exchange. It is as though your $10 bill could buy you a beer on one day and a bottle of fine wine on another. Moreover, it has become clear that Bitcoin does not offer true anonymity.

Lack of regulations: In India, cryptocurrencies are yet not regulated. As capital markets regulator Sebi regulates investments in stocks and derivatives, banking transactions are regulated by the RBI; crypto transactions do not have any regulator as yet. 2. Volatility: Price rise is a function of volatility.

Bitcoin is a risky investment with high volatility, and generally should be considered only if you have a high risk tolerance, are in a strong financial position already and can afford to lose some or all of your investment.

Any talk of billionaires buying Bitcoin has to start with Michael Saylor, executive chairman and co-founder of MicroStrategy (MSTR 14.36%). The billionaire started aggressively buying Bitcoin back in mid-2020, and has been continually ramping up his company's Bitcoin holdings since then.

Are There Any Bitcoin Billioniares? There are 16 cryptocurrency billionaires in Forbes' ranking of billionaires. Sam Bankman-Fried is still on the list, but Forbes lists the ex-CEO of FTX with no wealth. 16 There are likely many more billionaires who own crypto, but most do not publicize their holdings.

Holdings in online “wallets” are not insured by the government like U.S. bank deposits are. A cryptocurrency's value can change constantly and dramatically. An investment that may be worth thousands of dollars today could be worth only hundreds tomorrow.

Cryptocurrency exchanges, where digital money is bought and traded, are regulated inconsistently — if at all —depending on which country they are in. They have nowhere near the same level of governmental oversight or auditability as traditional banks. There is also the issue of security.

Bitcoin Undermines the Cycle of Trust

That is because crypto can be produced by anyone running a full node. Additionally, peer-to-peer automated transfers between two parties on Bitcoin's network mean intermediaries would no longer be required to manage and distribute currency.

While there are lots of great projects being built in the cryptocurrency community, there are also lots of scams and criminal activity. The three main reasons why there is so much illegal action related to cryptos is that they are anonymous, unregulated, and transactions cannot be reversed.