The Social and Political Implications of Cryptocurrencies

 Cryptocurrencies have forever changed the way we think about personal finance and doing business. Over the years, they have caused controversy, been criticized, generated crime, accompanied by failures and provided an opportunity to make good money.

Despite the numerous advantages, digital money has a number of disadvantages. Naturally, they are characteristic of all financial markets, but in the case of using cryptocurrencies, the risks are doubled due to their specific features. One such example is the storage of cryptocurrencies in the article https://btcman.io/guides/the-best-way-to-store-crypto-2023. What threatens those who have chosen bitcoin or other cryptocurrencies as an investment tool?

Malware and hacker attacks

The first of them were created back in the days of the emergence of electronic payment systems (WebMoney, QIWI, etc.). Now their analogues are adapted to the cryptocurrency market and can be activated wherever such an opportunity arises.

Cyber attacks are the second largest problem and a frequent occurrence in the world of emerging cryptocurrencies. Cases of hacker attacks are becoming more frequent, and fraud methods are becoming more sophisticated. Bitcoin wallets and large amounts circulating on trading floors have become especially attractive to thieves. Cryptocurrency exchanges have been repeatedly hacked, as a result of which many have closed due to bankruptcy.

Profitability, bankruptcy and closure of exchanges

Profitability is the main reason for the collapse and a pressing issue for most cryptocurrency exchanges. Many simply can not provide sufficient turnover of funds to "stay afloat" for a long time.

Over the previous 5 years, about 48% of cryptocurrency exchanges were closed, among which there were quite promising ones. At the time of the closure of the sites, users did not have time to withdraw money from their accounts, which led to multimillion-dollar losses. And the reason for this was not always hacker attacks.

No guarantees for damages

When carrying out operations through the exchange, the user does not actually own the funds that are stored on his account - the assets belong to the exchange and are controlled by it. The site only provides access to them when you log in. Thus, the owner completely trusts his bitcoin wallet to a third party, relying on the security measures that it takes to protect the money.

Volatility = instability

This point should be singled out separately. When there is such volatility, everyone starts giving advice on when to buy and sell. Of course, ideas can be good, but it is better for inexperienced market participants to step aside and wait, so as not to lose everything at once.

The cryptocurrency market is unstable, as it is at the formation stage. It requires special knowledge and skills that are often incomprehensible to beginners. And while high volatility may seem like an attractive investment, there are numerous “gaps” in this brand new area.

Loss of a secret code and an erroneous user transaction

This is the access key to the bitcoin wallet. The loss of the code implies the loss of all assets that are stored on the wallet. This can happen if the PC hard drive fails or the flash drive on which the code is written is damaged. According to statistics, this happens to 25% of crypto wallet owners who have lost about $18 billion. It is impossible to restore the code and return the money.

An error when entering a code of just one digit or sending it to the wrong address also leads to losses. The transaction cannot be canceled, so the amount sent cannot be returned.