Security Risks Associated with Crypto Currency Exchanges

With improved technology creating new innovations, cryptocurrency is the new lucrative investment opportunity. Financial experts have also stated that cryptocurrency, also known as virtual currency, is the future of digital currency and monetary exchange. One particularly beneficial characteristic of cryptocurrency is that it is not issued by any central authority, thus making it immune to government interference and manipulation.

Bitcoin is one of the most successful cryptocurrencies, and many people are rushing to invest in it. Nonetheless, there are risks that come with investing in cryptocurrencies. But before all that, you must familiarize yourself with the features of blockchain.

What Is a Blockchain?

Blockchain is a digitized, decentralized, public ledger containing all cryptocurrency transactions. This platform records recent cryptocurrency transactions and enables traders to monitor and keep track of virtual currency without central recordkeeping.

Features of Blockchains

Here are the significant characteristics of blockchain;

Anonymous

Both the accounts and transactions are not linked to any real-world identities, and everything is digitized with access using the internet only.  Once a transaction has been confirmed, it cannot be reversed. This means that in case you make an error during operation; it would result in loses since the transaction cannot be reversed.

Fast and Free

Transaction speeds are close to instant – taking only a couple of minutes to be confirmed. Furthermore, third parties are not involved in the process of validation and verification. All you need to do is visit https://nakitcoins.com/ and start trading. The software needed to send and receive bitcoins can be freely downloaded and installed on your computer or phone.

Let’s now have a look at the major risks linked to cryptocurrencies:

They Are Volatile and Continuously Affected by the Fluctuating Market

The price of bitcoin frequently changes. According to one survey, as of December 2017, the price of a single bitcoin was $20,000. However, come November 2018, this price had dropped to $6,460. This shows that with such an unpredictable market, you cannot be sure of a return on your investment.

Cybertheft

Cryptocurrency is also open to cyberattacks. Hackers target transactions and trades, and once the coins are lost or stolen, they cannot be retrieved. Moreover, experts cite that if you have a wallet and you happen to misplace or forget your key, then consider those coins wholly lost. 

Fraud

In recent years, the cryptocurrency exchange has been widely hit by cases of fraud. The rise in popularity of cryptocurrency has resulted in a vast number of fake buyers and sellers. To curb the problem, the Consumer Finance Protection Bureau (CFPB) and the Security and Exchange Commission have cautioned cryptocurrency traders to be very careful when undertaking crypto transactions. 

51 Per Cent Attacks

Over 50 per cent attack is another primary concern in the cryptocurrency market. The difficulty of mining bitcoin has made miners come together to form a pool which harmonizes their computational power.

However, when a pool becomes extra powerful, it can command over 50 per cent of mining power, and so poses a threat to the bitcoin network. This means that the pool can manipulate transactions by either mining invalid blocks or double-spending, which significantly harms other cryptocurrency investors.

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