Status Crypto: Worthy Investment Or Risky Business?

Investing in cryptocurrencies is a risky business. The potential for high returns is counterbalanced by the possibility of losing your entire investment. Crypto is a good investment for those who enjoy speculation and can afford to lose what they invest. It is not a wise choice for those seeking to grow their retirement fund or for long-term savings.

Cryptocurrency is a decentralised and secure digital currency, based on blockchain technology. It offers new investment opportunities, but it is not always a safe option. Crypto exchanges are vulnerable to security breaches and hacks, and there is also the risk of losing your private key, which would result in losing access to your cryptocurrency.

Before investing, it is important to research and conduct due diligence on the cryptocurrency or digital asset. It is not recommended to invest based on a friend's tip or out of FOMO. Understanding the purpose, technology, and use case of a cryptocurrency is essential.

Status (SNT) is a cryptocurrency that combines a messenger and a browser, aiming to be a gateway for smartphone users to start using DApps. It offers privacy-focused chat messaging, secure payments, an integrated wallet, and a store for decentralised applications. With Status, your mobile device becomes a light client node on the Ethereum Network, providing access to its ecosystem from anywhere.

Cryptocurrency's high returns and risks

Cryptocurrency is a digital or virtual currency secured by cryptography, which makes it nearly impossible to counterfeit or double-spend. Cryptocurrencies are generally not issued by any central authority, rendering them immune to government interference or manipulation.

High Returns

Cryptocurrencies have produced jaw-dropping returns for some investors. The total market capitalization of cryptocurrencies rose to about $2.4 trillion, and some investors have created substantial fortunes by taking on the risk of investing in early-stage cryptocurrencies.

The high returns are due to the fact that cryptocurrencies are highly volatile, meaning their prices change quickly and frequently, showing high highs and low lows. While trends can change, there are many factors that contribute to price fluctuations. Cryptocurrencies have also become more accessible to mainstream financial institutions and businesses, which have begun to show interest by offering and/or accepting them.

Risks

Investing in cryptocurrencies is risky due to potential high losses from security breaches, scams, and bugs. Cryptocurrency exchanges are particularly vulnerable to hacking and are targets of criminal activity. Safely storing cryptocurrencies is also more difficult than owning other assets, such as stocks or bonds.

Additionally, there are regulatory uncertainties as government regulations around crypto are constantly evolving and may differ based on where you live. A sudden regulatory crackdown could make it challenging to sell cryptocurrencies or cause a market-wide price drop.

Cryptocurrencies are also associated with high energy consumption for mining activities and their use in criminal activities. The technical complexity of using and storing crypto assets can also be a significant hazard to new users.

Crypto's legal status

The legality of cryptocurrencies varies across the world. Cryptocurrencies are digital assets, often based on blockchain technology, that are generally not issued by any central authority. This means they are theoretically immune to government interference or manipulation. However, in practice, their legal status varies by jurisdiction.

In the United States, cryptocurrencies are not considered legal tender, but cryptocurrency exchanges are legal and regulated by the Bank Secrecy Act. The Financial Crimes Enforcement Network (FinCEN) considers cryptocurrency exchanges to be money transmitters, while the Internal Revenue Service (IRS) defines cryptocurrencies as "a digital representation of value that functions as a medium of exchange, a unit of account, and/or a store of value". Cryptocurrency is also subject to taxation in the US, with the IRS treating it as a financial asset or property.

Other countries where cryptocurrency is not considered legal tender but is legal and regulated include Canada, Singapore, Australia, Japan, South Korea, the United Kingdom, Switzerland, the European Union, Malta, Estonia, Gibraltar, and Luxembourg. In these countries, cryptocurrency exchanges are typically required to register with financial regulatory authorities and comply with anti-money laundering and counter-terrorism financing (AML/CFT) regulations.

Some countries have taken a more restrictive approach to cryptocurrencies. In China, for example, cryptocurrency exchanges, transactions, and mining have been banned. India is also reported to be formulating a regulatory framework for cryptocurrencies, but the legal status of exchanges remains unclear.

The legal status of cryptocurrencies has implications for their use in daily transactions and trading. The lack of consistent global regulations and their decentralised nature have made it difficult to establish their legal status in different financial jurisdictions. As such, investors should carefully consider the risks associated with investing in cryptocurrencies, including security breaches, regulatory uncertainty, and market volatility.

Crypto safety

While cryptocurrencies are decentralized and secure, they are not immune to security threats and scams. Here are some essential tips to ensure crypto safety:

Research and Education

Before investing in cryptocurrencies, it is crucial to understand the technology and the associated risks. Research the different types of cryptocurrencies, blockchains, and software. Stay informed about the latest scams and safety measures. Online forums are excellent resources to learn from other users' experiences.

Secure Wallets

Storing your crypto in a secure wallet is vital for protecting your investments. Crypto wallets are software products or physical devices that store the keys to your crypto accounts, enabling you to transfer funds and make transactions securely. Research the various types of crypto wallets available and choose the one that best suits your needs and accounts.

Two-Factor Authentication

Enabling two-factor authentication (2FA) for withdrawals in your exchange app adds an extra layer of security. 2FA requires you to input a code from your phone each time you make a crypto withdrawal, making it harder for hackers to access your account.

Regular Monitoring

Regularly checking your crypto accounts helps you spot any suspicious transactions or unauthorized access attempts. It is also essential to keep your login credentials updated and secure.

Avoid Suspicious Emails and Websites

Be cautious of phishing emails and suspicious messages that may attempt to gain access to your accounts. Stay alert for odd email addresses, spelling and grammar mistakes, and unsolicited links or attachments. Be wary of giveaways on social media, and always verify the authenticity of any crypto-related websites or apps.

Withdraw Cryptocurrency

Exchanges that store large amounts of crypto are attractive targets for scammers. Reduce your exposure by withdrawing your crypto from the exchange and storing it in a secure wallet on your device. This way, an attacker would need to compromise your device or steal your private key to access your funds.

Strong Passwords

Use long and complex passwords that include a combination of uppercase and lowercase letters, numbers, and special characters. Avoid reusing passwords across platforms, and change your passwords regularly. If password management is challenging, consider using a secure password manager.

Avoid Public Wi-Fi

When conducting crypto transactions, avoid using free public Wi-Fi, as it may expose your internet traffic to potential interception. People nearby could determine if you are visiting crypto sites and decide to pay closer attention to your activities.

Secure Internet Connection

Ensure your internet connection at home is secure by testing your firewall, updating your anti-malware software, and creating strong passwords for your wireless router. Enable network encryption and disable network name broadcasting for added security.

Hardware Wallets

Hardware wallets, USB devices that store your key vault, are highly effective in protecting your crypto. They have no internet connection, making it challenging for attackers to infect them with malware. Hardware wallets also have PIN codes, providing an extra layer of security even if the device is physically stolen.

Verify URLs and Avoid Fake Software

Scammers often trick people into downloading fake wallets or using malicious applications. Always download wallets directly from the developer's official website, avoiding click-through ads on search engines or social media. Be cautious when searching for wallets on Google Play or the iOS App Store, as they have been known to display fake wallets in search results.

Backup Seed Words Securely

When setting up a crypto wallet, you may be asked to back up your seed words, also known as a 'secret recovery phrase.' Instead of digital backups, write these words down on a piece of paper and store it in a safe, secret place. Some people use fireproof and waterproof safes for added protection.

Avoid Entering Seed Words on Websites

Be cautious of websites or browser extensions that ask for your seed words, as these could be malicious attempts to access your accounts. If you encounter such a website, close the tab and clear your browser's cache.

Use a VPN

Subscribing to a good-quality VPN service can help encrypt your communications and hide your online activities from potential scammers and intruders. It also provides protection against man-in-the-middle (MITM) attacks, where a hacker intercepts your connection with a website and monitors your activities.

By following these safety measures, you can significantly enhance the security of your crypto investments and reduce the risk of theft, scams, and cyberattacks.

Crypto adoption

The increasing adoption of cryptocurrency is a sign of a maturing industry. Both individual investors and companies are seeking exposure to cryptocurrency, indicating their belief in its safety and potential for growth.

Cryptocurrency is a decentralized and secure digital currency, often based on blockchain technology. It offers new investment opportunities, but it's important to understand the risks involved. Cryptocurrency exchanges are vulnerable to security breaches and hacks, which have resulted in significant losses for investors. Additionally, storing cryptocurrency can be challenging, and there is a risk of losing access to your assets if you misplace your private key.

Despite these risks, the crypto and blockchain industries are growing stronger, and investors are gaining access to better tools and services to manage and safeguard their crypto assets. The development of more investment instruments, such as options and futures on Bitcoin and Ethereum, also contributes to the increasing adoption of cryptocurrency.

The potential for astronomically high returns attracts many investors to the cryptocurrency market. However, it's crucial to carefully consider your risk tolerance, financial goals, and time frame before investing. Diversification is essential, and investors should allocate an appropriate amount of their portfolio to cryptocurrencies while also conducting thorough research on the specific crypto assets they intend to invest in.

Crypto's long-term investment potential

Cryptos Long-Term Investment Potential

Cryptocurrencies are digital assets, most often based on blockchain technology. They are decentralised, meaning they are not issued by any central authority, and exist outside the control of governments and central authorities.

The advantages of cryptocurrencies include cheaper and faster money transfers, and decentralised systems that do not collapse at a single point of failure. The disadvantages include price volatility, high energy consumption for mining activities, and use in criminal activities.

The Risks of Investing in Cryptocurrency

Cryptocurrency exchanges are vulnerable to security breaches, hacks, and other criminal activities. Safely storing cryptocurrencies can also be challenging, and there is a risk of losing access to your assets if you lose your private key. There is also a risk that a crypto project will not succeed, or that regulators may crack down on the industry.

Cryptocurrency Adoption

Despite the risks, the cryptocurrency and blockchain industry is growing stronger, and investors are increasingly able to access institutional-grade custody services. Financial giants such as Block and PayPal are making it easier to buy and sell cryptocurrency, and many companies are gaining direct exposure to the sector.

Cryptocurrencies such as Bitcoin and Ethereum are launched with lofty objectives that may be achieved over long time horizons. While the success of any cryptocurrency project is not assured, early investors in a successful project can be richly rewarded over the long term.

Bitcoin, for example, is currently viewed by many investors as "digital gold", and it is expected to gain value over the long term due to its fixed supply. Many investors also expect Bitcoin to gain value as fiat currencies depreciate.

Ethereum, meanwhile, is building a global computing platform that supports many other cryptocurrencies and a massive ecosystem of decentralised applications (dApps). The large number of cryptocurrencies built on the Ethereum platform and the open-source nature of dApps create opportunities for Ethereum to benefit from the network effect and create sustainable, long-term value.

Frequently asked questions