26 Oct 4 Reasons why you shouldn’t invest in Bitcoins
In 2009 a new form of currency was invented by a group of people which became to be known as digital currency. This type of currency had no central or a single administrator and was rather decentralized. The Bitcoin as it came to be known allowed users to carry on transactions without the presence of a middleman or an intermediary and real identity need not be revealed during the process. Bitcoins allowed for international payments to be made easier and cheaper as they faced no regulations nor were there any terms and conditions which imposed limits on its use. It was beneficial for small-scale businesses because of no transaction charges and no credit card fee either. In 2015 Bitcoin was announced as an official means of payment and became a good means of investment with more and more vendors purchasing it. However, the Bitcoin failed to succeed in the market and many declared it a failed currency that may not be sticking for long. This blog focuses on reasons as to why you shouldn’t invest in Bitcoin
No Government backing
It is to be noted that every security offered by the government is risk-free which means you know at the end of the day you will get your return no matter what the conditions are as the government has backed it. Government backing means 100 percent guarantee that your investment isn’t in good hands. This isn’t the case with Bitcoins as there is no Government backing which means if something is to go wrong say fraud or any other crime, you could lose your investments. The identity of the user isn’t revealed during transactions which are something questionable as Bitcoins could be assisting in terrorist funding activities.
Lack of Security
The Bitcoin can lead to online frauds, other than this it has a decentralized system which means there is no centralized authority. It isn’t run by one authority but has people called miners who manage and look after it. The source of earning for these miners are the transaction fee and block rewards so if there is a decrease in any of these sources this will lead to miners backing out.
No proper way to invest
Bitcoin is a very risky investment as mentioned before because of the absence of regulatory authority. Other than this there will be confusion on where to invest in. It is advised that investment or buying and selling of Bitcoins is done with reputable exchanges. If you’re investing without providing your details you may open door to hacking and incur a loss. There have been cases where due to hacking there was a loss of millions of dollars which makes Bitcoin a very risky investment.
Lack of understanding
The procedure regarding Bitcoin could be a little tricky which means that you need to have proper information on how it works. Investors usually don’t look at the wider impacts involved that could impact the economy as a whole. We don’t want to see another financial crisis now, do we? All those who still want to invest in Bitcoins should take consultation from financial intermediaries and based on their consultation take on any decision regarding investment.
The Bitcoin overall has been termed a failure because of people not adopting this trend. This type of currency has a lot of risks involved which everyone isn’t willing to take. Perhaps the only possible means that can replace cash is gold which is why it still exists as a means of payment. Iran and Russia are examples of countries which are using gold as a means of payment since there is low risk involved though gold is exposed to both indigenous and exogenous factors such gold rate fluctuations.