What are the main risks of using Bitcoin?

Bitcoin is the first decentralized cryptocurrency, invented in 2008 by the unknown person or group called Satoshi Nakamoto. The network went live on 3 January 2009, and people use it to send money without a bank or pay merchants.

What are the main risks?

Bitcoin's main risks are price swings, payments that cannot be reversed, lost keys, scams, and platform failures. Its cash markets are still largely unsupervised, so prices can be manipulated.

Why are Bitcoin payments irreversible?

A confirmed payment cannot be reversed, even if you sent it to the wrong address. Miners add it to the ledger, and only the receiver can send the money back.

How can you lose access to Bitcoin?

Spending Bitcoin takes a private key, which a wallet app or a hardware device stores. A seed phrase is a written backup that can rebuild the wallet, and losing your only copy makes the coins unreachable. Access is usually lost in a few ways.

• Keeping the only copy where fire or flood can destroy it
• Typing the phrase into a site or app that asks for it
• Sending it to someone who claims to be wallet support

Can exchanges and wallets fail or be hacked?

Coins held at an exchange are a claim on that company, not a key in your hand. Hackers target virtual currency businesses, and an exchange can freeze withdrawals or fail.

What scams and tax rules affect US users?

Bitcoin scams include fake giveaways, impostor support, romance contacts who ask for money, and investment pitches. The IRS treats Bitcoin as property, so selling it or trading it can trigger capital gains tax.

Written byVahe HakobyanVahe Hakobyan is the editor-in-chief of World-Crypt. He covers bitcoin, markets and regulation, and leads the newsroom that fact-checks every story before it goes live.