Risks of Investing in Bitcoins

Last Updated: 07 Jul 2021
Pages: 4 Views: 91

Nowadays more and more people decide to invest in different digital currencies and Bitcoin is one of the leaders on the market. A lot of investors cherish this fast and secure electronic method of payment for its convenience, decentralization, and anonymity. It is compared with gold when discussed from the perspective of investments and gaining profit. And in most cases, Bitcoin is the winner – in our modern society with dynamic business environment evolving towards the cashless society it is considered a better investment than gold. These are the assets which have already been admitted to be the best store of value taking into consideration its positive features.

In our digitalized world, benefits of Bitcoin are increasing in number every hour. The service is not standing still – it develops, enhances its processes, and provides more opportunities for investments. It is important to understand why it is good and what a person can expect from supporting it. Here are several crucial factors that need to be stressed when discussing the possibility of investment into Bitcoin.

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  • Reduced inflation risk. Inflation is the plague of modern currencies all over the world. In different countries, the purchasing value of their money is deteriorating due to the political and economic conditions that cause inflation. Sometimes, governments are producing more banknotes than the assets they possess. Digital currency eliminates this kind of thread to your finances as this system has a limited number of coins in its stock. A certain amount of coins are going to be released in future years, and after a few decades, the process will stop completely.
  • Collapse-free currency. As this payment method is not controlled by any government being a global currency, you can sleep well knowing that your money won’t vanish one day due to the collapse of the currency.
  • Fast and transparent system. There is one simple rule – if you have money in your wallet, they belong only to you, and you can do anything you please with them. If you are a buyer who transacts this money, you can’t have them back as they are not yours anymore. And if it vice versa and you are the seller, the moment you receive money on your account, you are the only owner. And it takes seconds. Such system guarantees safety and simplicity.
  • No traces of your transactions. On one hand, this is a big plus as your transactions remain anonymous, and the source of your finances remains in secret. This eliminates the possibility of fraud but at the same time has some warning to consider that will be discussed further.

Every matter needs to be viewed from two opposite standpoints it is also necessary to clearly understand the Bitcoin risk factors. If you grasp the full picture, it is easier for you to make the right decision and decide whether or not you want to make an investment.

  • No traces of illegal transactions. The anonymity granted by Bitcoin can be used by people with filthy or illegal intention making Bitcoin an ideal platform for covering the traces of their crimes. The authorities are not able to track drugs or any other sort of forbidden things bought or sold using this payment system.
  • Easy to lose. This system is designed in such a way that if you lose your Bitcoins, it is impossible to restore them. If you have problems with your credit card or bank account, there are good chances to preserve your money. But with stolen Bitcoins, you lose them for good – if the wallet is hacked, say goodbye to your money.
  • Difficult to buy or sell. The process of purchasing is complicated, and you should just deal with it as there is no other way.
  • Young age. Bitcoin is relatively new payment methods and needs to be tested by people more to eliminate the drawbacks. The possibility exists that in future a new and more sophisticated method digital money transferring will be elaborated. But you won’t be able to check it soon.
  • Limited services. Not all shops or services support Bitcoin payment system which means that your abilities to spend money are restricted. Judging from online shopping development, this situation will change in future.
  • Volatility. Bitcoins are becoming more and more expensive every day which is not very convenient. But the prices are bound to stabilize in the near future, and the current price of hundred dollars per Bitcoin will stay in the past. Another risk with Bitcoins is that there is no certainty that this system won’t eventually vanish or will be accepted globally.

Before making a decision to invest in Bitcoin, take some time to study the market and consider its pros and cons. If the problems enumerated before seem too considerable and cross its positive features, leave this idea and find something which suits you best. But you can familiarize yourself with the system to try later when the conditions are more convenient. If you need stable sources of income, this system won’t meet your demands, and it is wise not to invest extensive sums of money into these coins. The choice is yours!

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Risks of Investing in Bitcoins. (2018, Aug 02). Retrieved from https://phdessay.com/risks-of-investing-in-bitcoins/

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