CIO OF HEDGE FUND BLOCKTOWER CAPITAL REVEALS 3 BIGGEST CRYPTOCURRENCY INVESTMENT RISKS

Описание: Ari Paul, CIO of cryptocurrency hedge fund BlockTower Capital, recently sat down with Business Insider’s Sara Silverstein to discuss the three main risks associated with investing in cryptocurrencies.. 1. INVESTMENT RISKS

The first area of risk, according to Paul, is investment risk, by which he predominantly refers to the volatility of cryptocurrencies. All anyone has to do is take a look at Bitcoin’s performance over the past month to understand what he is talking about. Bitcoin started off the month trading at just under $10,000 – a point of tremendous growth in and of itself – and in less than three weeks it more than doubled in value, peaking at just over $20,000.. Everybody was all about the bitcoin. CBOE and CME Group rolled out Bitcoin futures, Nasdaq said it would be following suit in 2018, there was even talk about Bitcoin ETFs once again becoming a possibility. Bitcoin had finally arrived on the mainstream financial stage and it was all going to be gravy from there.

Until it wasn’t.. Since its peak, Bitcoin has tumbled more than 40%, to a low of just over $12,000 as of this morning. Does this mean that the Bitcoin bubble has finally burst? Considering that Bitcoin has “crashed” and recovered after a so-called “bubble” at least three times previously – once in 2011 and twice in 2013 – I think it’s a little early to be throwing in the towel.. My point – and the point that Paul makes in the interview – is that these massive price swings are one of the biggest risks in cryptocurrency investment. Just like stocks and equities, any cryptocurrency can fall. Maybe they rebound, maybe they fall all the way to zero. It’s a crapshoot and a risk that investors need to understand and be willing to take.. 2. OPERATIONAL RISKS

The next area of risk is operational risk. In a nutshell, operational risk is anything having to do with how you interact with your cryptocurrencies. This can include storage, transferring, converting, etc.. The most significant point of risk in this area, however, is storage. Where and how cryptocurrencies are stored has a lot to do with how secure they are.. Talking about storing cryptocurrency, Paul stated:

"[It’s] a tremendous target for hackers, it’s a target for thieves, including insiders, and in a large operation, and there’s potentially no recourse. So you have to be really, really careful that you’re storing cryptocurrency securely. And that’s a serious concern.". Currently, there are three primary methods of storing cryptocurrencies that most investors use:

1. On an exchange
2. In a software wallet
3. In a hardware wallet. Storing Your Cryptocurrencies on an Exchange or Online Wallet

While definitely the most convenient storage method, especially if you are an active trader and/or have many different cryptocurrencies in your portfolio, keeping your coins on an exchange is the absolute most insecure way of storing them.. Paul and Silverstein discuss storing cryptocurrencies on Coinbase as an example, but as far