Since first being unveiled to the world in 2009, cryptocurrency and safety have been two closely linked topics. Now, 15 years after the first Bitcoin transaction, the space looks a lot different. But is the space safer? This article will explore the changing sentiment around crypto safety in 2024.
What is crypto?
Crypto is short for cryptocurrencies, a type of decentralized digital currency that harnesses the power of cryptography and blockchain technology. Unlike other forms of currencies, such as fiat currencies like the Great British Pound and the US Dollar, cryptocurrencies aren’t governed by banks or central intermediaries.
Although cryptocurrencies are the most popular type, other forms of crypto assets do exist under the crypto umbrella.
What is a crypto asset?
As mentioned, a crypto asset most commonly takes the shape of a cryptocurrency such as Bitcoin or Ethereum. However, the term crypto assets may also be used to refer to other blockchain-based assets such as stablecoins and NFTs.
Is it safe to invest in crypto assets?
The million-dollar question - is it safe to invest in crypto and crypto assets? It’s a question that has been asked since Bitcoin first emerged and it’s not going away. The honest answer is, it depends.
Investing in crypto in 2024 is safe if you take the relevant steps to protect yourself. In addition, the space is becoming more heavily regulated which should make this the safest time to invest in crypto and NFTs. On the flip side, some crypto supporters would argue that this goes against the intended decentralized nature of the space.
Despite increased regulation, blockchain technology's decentralized, anonymous nature makes it rife with fraudsters and crypto scams.
Some of the biggest hacks to occur in the crypto space include:
- Ronin Network hack of March 2022: $620 million was stolen from Ronin, a chain used for Axie Infinity, the biggest crypto game of all time
- Binance Smart Chain hack of October 2022: Hackers stole 2 billion BNB tokens worth around $570 million. The majority of these tokens were however frozen, meaning hackers got away with around $100 million
- Mt. Gox hack of 2011-2014: The exchange that once handled over half of global Bitcoin transactions had approximately $450 million worth of Bitcoin stolen between 2011 and 2014. A lack of security is believed to be the primary cause of the hack.
Due to the dangers of hacks and attacks, crypto is banned in several countries including:
- Algeria
- Bangladesh
- China
- Egypt
- Ghana
- Nepal
- Saudi Arabia
Is sentiment around crypto changing?
Despite being banned in many nations, sentiment is changing around the safety of crypto. Major nations like the US and the UK have demonstrated attempts to improve regulation and legislation. As a result, the topic of crypto is even becoming a discussion point in election campaigns.
Outgoing UK Prime Minister, Rishi Sunak, was a known crypto advocate. Prior to his stint as PM, Sunak launched a task force to explore the potential of a UK CBDC (Central Bank Digital Currency), a type of cryptocurrency issued by banks. CBDCs are generally seen as a common ground between the decentralized world of web3 and the centralized financial systems currently in place.
The US’s Donald Trump is also recognized as pro-crypto. Although once fiercely against cryptocurrencies, Trump has recently shifted his stance to appeal to crypto traders. He also became the first major party candidate to accept donations in the form of cryptocurrency.
It’s not just politicians that are getting on board with crypto assets. Nowadays, it’s uncommon for a major brand to not have unveiled some form of strategy to capitalize on the web3 boom. This usually comes in the form of an NFT release, often referred to as digital collectibles by traditional brands.
Despite the talk, the proof is in the numbers. In March 2024, Bitcoin reached a new all-time high of $75,830.
Are there safer alternatives to investing in crypto?
Stocks/shares
Stocks and shares are generally considered safer due to long-established regulations around them. Unlike crypto, stocks are not a new phenomenon and, as a result, laws have long been in place to protect businesses, brokers, and traders.
Index funds
Most investment experts will tell you that index funds are an even safer way to invest in the stock market compared with investing in individual stocks and shares.
This is generally due to the limited knowledge and experience needed to make money from an index fund. Investing in individual stocks and shares requires you, or someone else, to manage your portfolio while an index fund allows you to simply track a market and therefore, is seen as a passive investment.
Real estate
The housing market generally tends to increase over time. In some parts of the UK, housing prices have increased by over 100% in the last 10 years highlighting exactly how good of an investment real estate would’ve been back in 2013/2014.
On the flip side, real estate investment more often than not requires a large amount of initial capital and is more commonly seen as a long-term investment.
Collectibles
Another option for those looking to invest their money is investing in high-valued assets such as wine, watches, cars - even more novelty items like trading cards and celebrity memorabilia. Items like these often hold their value over time and have the added benefit of being tangible too.
If you are currently looking at ways to invest in crypto or other assets, ensure you do your own research and do not take anything in this article as financial advice.
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