One of the most outstanding features of cryptocurrency is that it is decentralized. This means that there is no one authority that is responsible for sanctioning its operations. This makes it impossible for any government to tamper with its modalities by regulating its terms of operations.
Every cryptocurrency transaction is documented on a public and digitized ledger known as the blockchain. These blocks contain a record of every cryptocurrency transaction ever made, from the inception of the cryptocurrency to the present day. These records are documented and stored in sequential order. This means that every user on the blockchain network has access to these records and can monitor when and where their transactions took place. It also means they do not have to seek approval from anybody or institution to gain access to these records.
These and several other cryptocurrencies have features that expose the user to several risks.
THE RISKS OF CRYPTOCURRENCIES
Here are a few risks that you may be exposed to when using cryptocurrency:
- TRANSACTION RISK: There is no way to predict how safe cryptocurrency will be in the near future. Hence, exposing users to a high-level of vagueness. There has been an immense level of activity generated by several online cryptocurrency platforms. These speculators’ sole aim is making both short and long-term profits from the state of the cryptocurrency at any given time. The decentralization of cryptocurrency only means that there is no organization that will be held responsible for any fallback that these digital currencies may experience. Hence, exposing users to uncertain monetary risk. Use this website for hitch-free cryptocurrency transactions.
- FRAUD OR CYBER RISK: This is one of the most common risks that every user of cryptocurrency is potentially exposed to. There is no way to filter the anyone that has access to cryptocurrency platforms. Hence, exposing these platforms and eventually the users of these platforms to several fraud or cyber risks. There is no structure available in the cryptocurrency world that will help keep criminals off the network. Hence, hackers and would be criminals have access to the same blockchain records that you have access to. This then places the responsibility for security on the shoulders of all investors. In other words, these investors are obliged to make significant investments in digital security systems for them to minimize the risk from fraudsters or cybercriminals. The decentralization of these digital currencies also means that there is no institution that is tasked with protecting your investment.
- RISK OF OPERATIONS: When a system is centralized, the regulating institution is often tasked with the security of every transaction carried out on its platforms. This implies that transactions can either be sanctioned or reversed by these institutions. As a result, when there is an alert of any form of theft, either by hackers or some online thief, these institutions would try to reverse the transactions. This safeguard is not available to cryptocurrency investors because of the decentralized feature of these digital currencies.
The responsibility for the security of every cryptocurrency transaction rests on the shoulders of the individual investor.