Price Volatility Risk
- Their price fluctuations are very severe. For example, Bitcoin's price may rise or fall by thousands of dollars in a short time. This large volatility makes it difficult for investors to grasp the timing of buying and selling, leading to significant losses.
Regulatory Risk
- In China, activities related to virtual currencies are considered illegal financial activities. Government regulatory policies on virtual currencies may prevent investors from trading normally and could even lead to legal liabilities.
Security Risk
- Virtual currency trading platforms may suffer from hacking attacks. Since transactions are based on networks and digital wallets, once hackers invade, investors' assets may be stolen, and it is difficult to recover them.
Market Manipulation Risk
- The transparency of the virtual currency market is relatively low and can easily be manipulated by a few major players. Some large holders or institutions can influence price trends through significant buying or selling, making it easy for ordinary investors to suffer in such a manipulated market environment.
Technical Risk
- These virtual currencies are based on complex blockchain technology, and technological updates or potential vulnerabilities, such as smart contract flaws, can have a huge impact on their value.
Although investing in virtual currencies like Bitcoin and Sui carries huge risks, they are also considered to have certain advantages in some contexts:
However, its advantages are worth betting on for a future
Decentralization
- They are based on blockchain technology and are not controlled by traditional financial institutions (like banks). Bitcoin transactions are peer-to-peer and do not require intermediaries, which theoretically can reduce some transaction costs and avoid disruptions in fund flow due to problems with individual financial institutions.
Potential High Returns
- Its high price volatility also means the potential for high returns. If investors can buy at low prices and sell after significant price increases, they might achieve extremely high returns, such as early investors in Bitcoin who had the chance to earn hundreds or thousands of times their investment.
Global Usability
- Theoretically, Bitcoin and Sui can be used globally, without regional and exchange rate restrictions, which may provide a relatively convenient payment method for cross-border transactions and allow for quick international transfers.
However, these advantages are often overshadowed by risks in the current complex market environment and strict regulatory policies, and there is significant controversy over their legality and practicality.
