Risks of investing in cryptocurrencies

Risks of investing in cryptocurrencies

Bitcoin experienced its worst first quarter in history in 2018, falling from $13,412.44 to $6,928.85 in the three months to 31 March. Bitcoin, among other cryptocurrencies, are slowing down with market values expected to plummet further.

The highly volatile nature of cryptocurrencies means investors need to be aware of the risks before deciding to invest in digital currencies. Consider the following risks:

Fluctuating values
Market values can fluctuate quite dramatically as its value is based on its popularity at a given time. Regulatory threats and the likes of Google, Facebook and Twitter banning cryptocurrency advertisements recently can have all contributed to recent drops.

Less security
Cryptocurrencies are a lucrative market for hackers. Malware has been specifically created to steal cryptocurrencies, leaving the contents of your digital wallet at risk. Unfortunately, you cannot retrieve any digital currency which is stolen as it is not guaranteed by any bank or government.

No legal protection
In most countries, cryptocurrencies are not protected or recognised as legal tender. Additionally, the exchange platforms on which you buy and sell digital currencies are not regulated, so if the platform fails, you will not be legally protected.


If you believe the matters discussed above are relevant to your business, please contact Darren Smith of our office to discuss further.

Darren is a Chartered Accountant with extensive experience, including working in the big 4 and medium sized firms before becoming a partner of a city based firm in 2000.

He has gained much experience and has extensive knowledge in providing business and taxation advice, superannuation planning, negotiation of sales and acquisitions of businesses and property development. His client base covers a wide range of industry groups.

Darren works with business owners to grow their businesses and create personal wealth within and outside of their business.

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