On Tuesday, bitcoin fells briefly below $28,000 for the first time in ten months, while cryptocurrencies overall lost nearly $800 billion in the market worth in the past month, according to the data website “CoinMarketCap”, as investors worry about tightening monetary policy.

How huge is the cryptocurrency market?

In November, the most famous cryptocurrency, bitcoin, hit an all-time high of more than $68,000, pushing the crypto market value to $3 trillion, according to CoinGecko. That figure was $1.52 trillion on Tuesday.

Cryptocurrencies have enjoyed big growth; the market is still very little.

The U.S equity markets, for example, are worth $50 trillion while the Financial Market Association and Securities Industry has pegged the outstanding of U.S fixed income markets at $53 trillion as of the end of 2021.

Who owns and trades cryptocurrencies?

Most of the Ethereum and bitcoin in circulation are held by a select few. An October report from the National Bureau of Economic Research found that 10,000 Bitcoin investors, both entities and individuals, control about 1/3 of the bitcoin market, and 1,000 investors own about three million bitcoin tokens.

About 14 percent of Americans were invested in digital assets as of 2021, according to Chicago research University.

Are bitcoin and cryptocurrencies a good investment?

Bitcoin is an extremely volatile asset to purchase. This is forever something to keep in mind when investing in bitcoin for the future.

Bitcoin and other digital currencies are extremely risky investments. Whether you are purchasing bitcoin to purchase goods, or simply are hoping to hold this asset until you sell it for more cash, there is no promise you will get any of your money back.

Cryptocurrency security

If you pick to invest in cryptocurrency, you should think about it as a high-risk investment, and plan accordingly. Your private keys are your digital identity in the cryptocurrency market, and they permit you to trade cryptocurrency through the internet. If your private key is stolen, the thief can take your money or commit fraud in your name. Digital currency wallets store your private keys. A cold wallet is best, as they do not have an open connection to the online world. For included security, you may want to diversify with many wallets. Do not forget to print and keep your backup words in a secure place.

To save your cryptocurrency investment, make a plan for physical security, human security, and cybersecurity. For your gadgets, install anti-virus, keep current with patching, and start a firewall.  For yourself, use the best password policy, enable multi-factor authentication, and do not fall for phishing, social engineering, adware, etc.

What will the future of Bitcoin look like in 2022?

Cryptocurrencies are in irregular asset class and nobody truly knows just how high the price of bitcoin could go. But with the prices so high and governments looking at how best to go about managing these coins, the risk of putting money in bitcoin is very high because prices are already crashing.

As forever with investing, it is impossible to truly tell how 2022 will look for digital currencies. But with certain trends happening repeatedly throughout the bitcoin history, there are some reasonable predictions.

Bitcoin future predictions

Firstly, price volatility will likely remain, resulting in surges and drops in price. Secondly, changes to how cryptocurrencies are regulated should be guessed, considering many changes are already happening on a fairly regular basis.

Thirdly, the mainstream adoption of cryptocurrencies and bitcoin will continue. Many huge firms currently permit customers to pay with bitcoin, with more joining all the time. More and more people are becoming interested in bitcoin, resulting in companies and banks integrating cryptocurrency services into their operations.

Cryptocurrencies as a strong currency

In the near term, the prospects of cryptocurrency are restricted, just because it is so new, and there is still much work to do on security, technical, and legal fonts. Consider only the aspect of time: Visa can process over 50k transactions per second, whereas Bitcoin can process less than ten. So, it is highly unlikely that cryptocurrency will challenge the American dollar’s status as the world’s reserve currency in the near future. El Salvador’s recent experiment in making bitcoin as official nation money alongside the American dollar has not gone well.

Over the horizon, anyway, the power of blockchain and cryptocurrency retain the potential to transform not only world finance but world politics. The FinTech space is very latest because internet users, coders, digital revolutionaries, and entrepreneurs continually find areas to better the way that humans do things. In the end, money is a public normal, and once the public gets relaxed with cryptocurrency functionality, usability, security, and adoption will follow. But that may take some time, and it may need important patience on the part of the average investor.

In the meantime, it is best to presume that cryptocurrency is a top-risk investment. You should even think of it as a binary investment: while a digital currency such as bitcoin may become the most precious asset in human history, its value may also – for some reason that may be difficult to guess, given the enormous number of variables involved – drop to zero. At the moment, it is not possible to know. What we do know is that billionaires, like Elon Musk, can afford to lose their bitcoins, because they represent a little fraction of their wealth. Ensure the same rule applies to you.

What is the safest way to invest in cryptocurrencies?

If you are looking to invest in bitcoin, it is more vital than ever to exercise safe investing. You will need to go to a digital currency exchange that permits you to buy bitcoin. And when you are buying, remember to:

• Only invest what you can afford to lose
• Spread your investment between various asset classes with different levels of danger. With bitcoin being a risky investment, consider putting some of the rest of your cash into a less risky ISA, for example.
• Have a reliable place to save your bitcoin and cryptocurrency, such as a digital wallet, and make sure your password is safe and cannot be forgotten or stolen.

With all investments, particularly ones as risky as bitcoin, it’s vitally important to have the right financial advice.