Written in Partnership with Amir BakianThe prices of Bitcoin or other cryptocurrencies are assigned by the market forces and move with the utility and demand changes. People who usually invest in Bitcoin may know the value determined and the level of risk that exists here.
But the BTC price can never be lesser than zero.
Let us understand why this cannot happen.
If you are buying the coin or token, then the price you pay is determined by the market’s current value, along with the trading fees. The person can even get Bitcoin from mining or selling products or services. The lowest value to which Bitcoin can fall is zero and not less than that.
The value of Bitcoin may fluctuate widely because of the speculations in the market, but the values can never be less than zero. It means you would actually have to pay someone to take the tokens and coins. No property, asset, security, or currency will be worth less than zero.
Why can it not go negative?
Before you understand this concept, you must know how exactly the entire process of transaction even works. Bitcoin does use P2P or peer-to-peer network technology, and the algorithms and transactions of cryptocurrency run on blockchain computers consisting of several nodes.
The node that will be given will also have the list of your transaction history with the balance. When the transaction is confirmed, the file you will read will give (dash) X amount to (dash), and then it will be signed before even the computer nodes the transaction validation with the particular algorithm.
Once the transfer is verified officially, that will be put together with the past transaction so you can complete the new block so they can record the books. After that, the data block will be set with the rest of the Blockchain, which cannot be altered, and then complete the transaction.
If you have an insufficient balance, then that will reject the transaction. But actually, it is not balanced, which is checked, but input and output, and output are also checked when sending the coin out in the transaction.
Is it possible that you can lose cryptocurrency investments?
Unfortunately yes! The person can lose the cryptocurrency, but that is not because the coin’s value will sink so low that it is underwater. Instead, cryptocurrency is vulnerable, can be hacked, and sometimes gets lost because of human errors.
What will happen if Blockchain is hacked?
With the launch of Bitcoin in 2009, blockchain technology also emerged, a decentralized web of computers that will be allowed for the trading and creation of various types of cryptocurrency. Bitcoin is decentralized and does not require a third party, such as a bank or any other government agency.
These are not regulated by the government or other bodies such as the SEC. This kind of self-policing works so well until it does not, as there are several instances where the hackers have stoke millions of coins. Even worse, the traders cannot do much about these vulnerabilities, but crypto platforms are evolving and will keep the cryptocurrency secure.
Can a person lose more than what you invest?
It may be clear from the above that the value of crypto can never fall below zero. The investors can lose money on the crypto investment, and they may see the negative value, and that depends on the strategies they have used. That will be possible if the investor does short selling or buy the crypto on margin.
Tips to prevent losses
Here are a few tips that you should do that will help you prevent the losses:
- The first thing that an investor should do is create a strategy before starting. You need to develop and understand the right strategies to turn around your investments for your benefit.
- When you decide to invest in Bitcoin, you need to stay in the game for a long time. That will be a sensible decision because one day you will not be able to make more wealth.
- When it comes to investing in cryptocurrency then, it is critical for you to keep an eye on the timing of the market. The person needs to read the news and articles that will give the idea about when is the right time for you to invest.
- Another thing that you need to consider is maintaining a diverse portfolio, as it is crucial. When you put all your money in just one cryptocurrency, you may even lose it if the value goes down. But if you will diversify your investment then that will reduce the risks which are involved.
Conclusion
Cryptocurrency can never go negative in real life. Still, it is possible for traders that they lose money if they do not work strategically, such as in margin trading or future contracts.
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