Understanding risks
What can go wrong, how it turns into a loss, and what of it can be transferred
Putting money into a program on a blockchain means taking on risks that do not exist with a bank account. This page lists them. Each one is explained to the same pattern.
Seven that keep coming back
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The program itself contains a flaw. It does exactly what the code says - and that is not what was meant. The most common starting point for cover products.
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A program on the blockchain knows no prices. It asks a place outside. If that place delivers a wrong value, the program calculates correctly with a wrong figure.
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It is not the code that is faulty; somebody gains control over keys, administrative rights or a party involved.
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A token meant to hold a fixed value no longer holds it. Whoever holds it loses, without anything having been attacked.
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Whoever holds the key decides on access. That can be a trading platform or you yourself - each route has risks of its own.
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Assets are moved between two blockchains. In between sits a place that connects both sides - and it holds a great deal of capital while it does.
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Many protocols can be changed by vote. Whoever gains enough voting weight can change the rules under which your money sits there.