Risks associated with cryptocurrencies

Cryptocurrencies and the underlying blockchain technology are a recent development. For this reason, the purchase and sale of cryptocurrencies entails certain risks. We want you to be aware of these risks.

Price fluctuations of cryptocurrencies

Although cryptocurrencies have been available for several years, blockchain technology is new. Therefore, investments in cryptocurrencies are still regarded as high-risk investments in which a total loss of the invested investment is possible.

The price history of Bitcoin shows that the value of cryptocurrencies can be extremely volatile. In 2017, the price rose from initially 998 USD to over 18'000 USD, In 2018, the price started at 13,657 USD and was 6,404 at the end of June USD, Within half a year, the value of a bitcoin had halved. *

Such price fluctuations are currently typical for investments in cryptocurrencies. Be aware that such extreme fluctuations can occur. Blockchain technology is independent of public institutions. Therefore, there is no institution that will take remedial action to stabilize the prices of cryptocurrencies. Due to the still low trading volume (compared to standard currencies such as euro, US Dollars or similar) can easily create speculative bubbles and possibly break the trade.

Retention of your cryptocurrencies

The storage of your cryptocurrencies happens in so-called wallets. These wallets consist of a public key and a private key. The safekeeping of these two keys, especially the private key, is your responsibility. In case of loss or theft, there is no way for you to restore the cryptocurrencies. If you have any uncertainties regarding the safekeeping of your coins, then you are welcome here contact us via the contact form.

Regulations and laws

There are currently no uniform regulatory measures for cryptocurrencies. Creating such frameworks is very difficult due to the decentralized nature of blockchain networks. Some countries, such as the Principality of Liechtenstein, have developed initial draft legislation and are in the process of implementing it. It will be some time before the legal framework is reliable. So there is a risk that cryptocurrencies, for example, be declared illegal and that they can not be used in the future as a means of payment or only to a very limited extent.

Blockchain as new technology

Applications on the blockchain technology are very young projects. As with any young technology, unforeseen events can occur so far. Transactions are stored and verified in the blockchain. However, there is a risk that transactions will not be filed correctly and therefore cryptocurrencies will be sent to wrong addresses. Be aware that even the best technology is not infallible.

Our advice

Invest in cryptocurrencies only after weighing all risks. Check your risk appetite before investing. Have a look at your financial situation (risk-bearing capacity). If in doubt, contact a knowledgeable advisor to assist you in this decision-making process.

* Courses used by coinmarketcap.com. Courses without guarantee.