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Bitcoin security: Your new investment concern

Blockchain auditing firms, surveillance of crypto market crime and solid core processes can be better investment options than Bitcoin.



Bitcoin is not safe. It is anything but safe. The market cap of the currency is extremely volatile, and that alone means the risk is much higher than it should be.

Now, as any financial adviser, major investor or influencer will tell you, no investment is safe. While that’s true, nothing is quite so—well—ridiculous as the much-touted Bitcoin.

Does any of that mean you shouldn’t invest? No, not necessarily. As with any investment, you must assess the risk-reward ratio and decide how it applies to you. But if you do decide to invest—or already have—there are some things you should know.

What are the security risks?

Aside from the price fluctuations—and Bitcoin has been known to lose thousands of dollars at a time—there are other security risks you should consider when dealing with cryptocurrencies. We’re focusing on Bitcoin almost entirely here, but you should know it’s not the only virtual currency that has glaring security flaws.

The crypto-sphere is ripe with cybercriminals ready to make off with your hard-earned cash. In fact, there have been so many high-profile crypto-heists that it’s essentially becoming par for the course. It’s nearly every week now that we hear about one or two more crypto-related attacks, most dealing with unsecured portals.

When you acquire a cryptocurrency such as Bitcoin, it gets stored in a protected wallet. After you first create your wallet, you receive an encryption key that allows you to recover or gain access in emergency situations. Otherwise, the only way to access your wallet is via authorized clients.

They’re supposed to be secure, but wallets have gotten compromised in the past. If you lose your encryption key or lose access to your wallet altogether, you lose all your funds stored within—forever. It’s akin to losing your wallet in real life, only you usually have much more money stored inside the virtual wallet, which makes for bigger losses.

The exchange of Bitcoin to fiat money via cryptocurrency portals is highly vulnerable to hacking.

The exchange of Bitcoin to fiat money via cryptocurrency portals is highly vulnerable to hacking. (Source)

To make an exchange with a cryptocurrency, you must go through one of many exchange portals, which convert the funds into a fiat currency or another type of virtual coin. These exchanges are also prone to corruption and attacks.

Finally, if you mine for coins, you have likely joined a mining pool that distributes earnings among a large team. Guess what? Even mining pools are vulnerable to getting hacked, and it happens pretty often.

But we’re not done yet. Factor in transaction delays and price shifts in those lengthy periods, pump-and-dump ICO schemes and price manipulation—now, it’s a party. It’s also clear there are numerous security risks related to BTC and cryptocurrencies, in general.

Anyone unfamiliar with Bitcoin might be inclined to ask: Does it even have security?

Cryptocurrency security opportunities

Believe it or not, there is value in investing in crypto and Bitcoin security platforms. The inherent risks show a need for better security measures across the board, and because Bitcoin is so lucrative, the right security move can make a huge difference.

But if Bitcoin is so volatile, and at times so insecure, how can investing in security make a difference? How is it even a viable option for investors?

Investing in things like blockchain auditing firms, surveillance of crypto market crime and more solid core processes makes for great potential. The latter is especially important because to use any crypto, you need both reliable wallet and exchange services.

The reality is security provides opportunities that are just as promising as cryptocurrencies and the crypto-sphere. Companies like Chainalysis have raised millions by betting on Bitcoin surveillance and advanced reporting metrics.

Maybe the ideal way to go is investing in startups and Bitcoin security firms, as opposed to the currency itself.

DISCLAIMER: This article expresses my own ideas and opinions. Any information I have shared are from sources that I believe to be reliable and accurate. I did not receive any financial compensation in writing this post, nor do I own any shares in any company I’ve mentioned. I encourage any reader to do their own diligent research first before making any investment decisions.