Is Bitcoin Safe? What Savvy Investors Need To Know (2023)

Athena Alpha

If you’ve been thinking about investing in Bitcoin you’re not alone. Millions of retail investors all over the world have been thinking the same thing for years and we’re now also seeing a huge wave of institutional investors starting to take greater and greater interest too. But it’s important to first stop and ask, is Bitcoin safe?

Asking this is what any good investor does for anything they’re wanting to invest in as it’s the first stage of doing proper due diligence. So let’s look at what risks there are when investing in Bitcoin and what steps you can take to ensure they’re not a problem.

Is Bitcoin Safe?

Bitcoin is generally considered by the global investment community as being a risky asset class. This is mostly due to the volatility in its price, rather than its actual technology. We should also note that we are only talking about Bitcoin here, not any other cryptocurrency.

How safe of an investment Bitcoin is can also change a lot depending on what risk factor you’re referring to. For example, while Bitcoins price is very volatile, it allows you to have far greater property rights than any other asset, meaning it’s extremely safe when it comes to seizure or confiscation risks. It’s also immune to the printing of money we see in most countries around the world.

Furthermore the core technology of Bitcoin is built on the SHA-256 cryptographic algorithm which is what safeguards much of the Internet, including existing financial institutions. As such, the Bitcoin Network is for all intents and purposes impossible to crack and very safe to use.

Learn More: Is Bitcoin Real? And Is It Safe?

All Investments Have Risk

Purchasing power of one US Dollar. Source: Statista

When it comes to investing it’s also important to understand that everything has risk, even not investing has risk. For example, if you had stuck $100,000 USD under your mattress in 2015, it would have lost around 23% of its value meaning you’d need $130,550 of cash today to buy the same things with it. Looking further back in time this loss of purchasing power is even worse as can be seen in the above chart.

A good investor will look at a broad range of investment options and weigh up all the risks involved in each one. Traditional investments such as real estate, stocks or bonds have their own risks and can suffer large losses if there are issues with the underlying handling of the assets like was seen in 2008.

To correctly asses how safe Bitcoin is we not only need to know what risks it specifically has, but also be able to compare them to other investment risks. After that a good investor will take into consideration their personal preferences, tax situation and current position in life.

Is Bitcoin Safe To Invest In?

While we’re very bullish on Bitcoin, we also don’t hide its risks. Investors should be fully aware of the following risks that are involved when buying Bitcoin as an investment:

  • Volatility: Bitcoin’s still a highly volatile asset that changes price every second, every day
  • Exchange Fraud / Bankruptcy: Many users still allow third parties to custody their funds for them which becomes a problem when they go bankrupt or collapse. To avoid this risk, it’s recommended to never keep your bitcoins on an exchange and take full self custody
  • Hacking: While this is a risk with virtually all assets in today’s modern world, Bitcoin is often stored by the user and not a financial institution and as such, may not be secured as well if the user isn’t very technical. This can lead to users losing their bitcoins to any number of hacking tricks that wouldn’t otherwise be possible. Using a dedicated Hardware Crypto Wallet can significantly reduce this risk.
  • Scams: There are a number of Bitcoin Scams that you should be aware of
  • No Insurance: Deposits in banks are usually insured by the government in case the bank goes bankrupt, Bitcoin has no backup or insurance policy similar to stocks, real estate or bonds
  • Regulation: As Bitcoin is still very new, regulations are still evolving as time goes on. As Bitcoin grows and draws more attention upon itself, regulation is expect to increase
  • Protocol Risk: Although the Bitcoin network, protocol and cryptography that secures it have been battle tested for 10+ years, it’s still possible that someone may find a design flaw

How You Can Invest In Bitcoin Safely

Just like you can reduce the risks involved when you invest in real estate or stocks you can also take some simple steps to ensure you safely invest in Bitcoin too.

Understand What You’re Investing In

Thou shalt not invest in anything thou doesn’t fully understand

The absolutely first tip we can give is to properly educate yourself. All the tools and money in the world won’t do you any good if you don’t understand what you’re investing in and Bitcoin can be quite different to what most assume.

Helping people understand Bitcoin in simple terms is what we specialise in here at Athena Alpha, so we have plenty of excellent resources available for free. Two main ones are our Beginners and Bitcoin 101 categories or you can start with our Understanding Bitcoin piece. Other great beginner pieces include:

New to Athena Alpha? Start today!

Choose A Secure Private Wallet

Not your keys, not your coins.

Choosing a self-custody wallet and holding your own Private Keys is the next most important thing to do when it comes to Bitcoin. A wallet is what generates, stores and manages your private keys just like a Password Manager does for your passwords.

Private keys are what’s used to spend your bitcoins, so whoever holds your private keys knows and controls everything. If you let someone else hold or “custody” your private keys then they can see your balances, your transactions, the senders and receivers, everything. You have zero privacy. It also allows them to sensor, kick ban you or even spend your funds.

Pick Your Wallet: What Is A Bitcoin Wallet?

Choose A Non-KYC Exchange

KYC (Know Your Customer) and AML (Anti Money Laundering) are regulations that many crypto exchanges like Coinbase or Binance comply with. It’s why they require you to “verify your identity” before they let you do anything. They want to know your name, address, drivers license, photo and more.

Exchanges that enforce KYC are incredibly bad for your privacy and security. Once you give them your private information, they link whatever bitcoin you buy to that identity. Forever. Check out our reviewed and rated list of Crypto Exchanges that will help guide you to a safe and private way to buy bitcoins. We add to the list frequently and most exchanges (65%+) fail our tests miserably.

Start Out Small & Practice

Once you have your Bitcoin wallet downloaded and have chosen the place you’ll buy your bitcoins from, make sure you start small and practice! There’s no “minimum investment amounts” with Bitcoin. You can literally buy $1 if you want to so you don’t need to invest thousands just to learn.

Don’t Touch Shitcoins

One of the biggest and most common mistakes many intelligent investors make when starting out with crypto is to want to “diversify” their crypto portfolio by buying some of the other cryptocurrencies out there instead of just Bitcoin. These other cryptos are called altcoins or shitcoins.

Diversifying your portfolio is an age old and very prudent investment strategy that ensures you don’t risk everything on just one asset. The key mistake people make though is thinking that it’s safe to diversify across these other shitcoins.

We are focused on Bitcoin only for a very good reason. We believe investors should only focus on Bitcoin, not Crypto and that these other coins are extremely risky and not what they claim to be, with many of them being outright fraudulent or scams.


To begin investing as safely and quickly as possible we recommend following these steps:

  1. Learn First: Read some of our free guides and fully understand your investment
  2. Get A Wallet: Learn about and choose your own self custody Bitcoin Wallet
  3. Get An Exchange: Pick a No KYC Crypto Exchange that best suits your requirements
  4. Start Small: It’s easy to make mistakes, so start small with an amount you’re willing to lose
  5. Stay Focused: Don’t get greedy. Don’t buy shitcoins. Don’t try and time the market

Once you’ve bought and taken full custody of your bitcoins keep learning! Bitcoin is quite a unique and vastly different asset class and technology than what most people are used to. As you start to invest more and more we have Advanced and Expert levels to help guide you. We also heavily recommend that you invest in a hardware crypto wallet to help properly store and protect your bitcoins.


Is Bitcoin Safe And Legal?

Bitcoin has been around since 2009 and has a few risks, just like all investments do. These risks include things like volatility, hacking, scams and regulation changes. Regarding legality, Bitcoin is legal in most countries around the world, but some like China do not allow it.

How Safe Is Bitcoin Trading?

In our opinion trading (or day trading) is not a safe investment activity no matter what you’re doing the trading of. We consider it no different to gambling on horses or a slot machine and recommend investors completely avoid it.

Can You Lose Real Money On Bitcoin?

Yes. If you buy bitcoins and then sell them at a lower price you will have lost money. We should also note that Bitcoin is a type of money and is considered just as real, if not more real, than fiat currencies such as the USD.

Is Bitcoin Safer Than A Bank?

Due to Bitcoins high volatility, it’s generally considered more risky to store your wealth in Bitcoin than a bank. Banks also usually have government insurance up to a certain amount such as the FDIC in the United States.

Is Bitcoin A Good Investment?

Although Bitcoin is volatile, it has returned on average around 100% per year over the past 3 years and over 60% per year over the past 5 years. While these are incredible returns, there’s no guarantee that they will continue in the future. Whether Bitcoin is a good investment for you depends heavily on your own personal circumstances.

How Can I Get My Money Back From Bitcoin?

If you wish to swap your bitcoins back into a fiat currency like the USD, you can sell them on any exchange. We recommend using non-KYC exchanges and you should also ensure you learn about and adhere to any tax laws regarding Bitcoin in your country.

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