Understanding whether Bitcoin is a safe investment depends on how you define security.
There is no doubt that the price of Bitcoin is highly volatile. In 2022 alone, the price of BTC dropped from around $48,000 to around $19,300 at the time of writing.
A loss like that would drive investors to the hills of other asset classes. If you define security as an investment with a relatively stable price, Bitcoin may not be a safe bet for your investment portfolio.
However, Bitcoin properties of mercury It may have changed.
“Bitcoin is becoming more integrated with traditional financial markets, with more participation from retail and institutional investors,” said Ryan Burke, general manager of US financial services firm Invest at M1. says Mr. “Historically, BTC has been more volatile, but recently it has become more correlated with large-cap technology and has become a de facto mainstream alternative asset.”
Thinking of Bitcoin as a commodity-like digital gold rather than an investment security adds another dimension to the security question.
“Bitcoin technology is relatively secure, but it is not anonymous and relies on passwords,” said Daniel Rodriguez, chief operating officer of US firm Hill Wealth Strategies.
Bitcoin camouflages personal information, but cryptocurrency wallet addresses are public.
“Hackers can use web trackers and cookies to find out more information about transactions that lead to personal information and data,” says Rodriguez. Bitcoin may not be completely secure if anonymity is part of the definition of security.
Likewise, your cryptocurrency is only as secure as the crypto wallet that stores it. increase.
Bitcoin purchases are often accompanied by disclaimers that say “not SIPC protected” or “not FDIC insured”. This means that neither of these backstops will bail you out if the company holding your cryptocurrency investment fails.
Note that none of these concerns are related to the security of the Bitcoin network itself, according to Gil Luria, US technology strategist at DA Davidson. ”