Over the last decade, cryptocurrency has taken the financial world by storm. Since the internet has created one global village where individuals can meet and transact online, the demand for digital currency has increased. As a result of such popularity and other advantages offered by the use of cryptocurrency, the value of Bitcoin has skyrocketed.
The anonymity of Bitcoins and their decentralized nature, combined with lack of financial regulations make them a lucrative mode of payment. Also, the increased value of Bitcoin has raised interest among investors who want to make huge profits within a short period of time. However, investing your money in cryptocurrency, especially Bitcoin may not be a great idea.
3 Reasons Why Investing In Bitcoin & Cryptocurrency ICOs Could Be A Bad Idea Now:
One of the main reasons you should think twice before hitting the ‘buy’ button for Bitcoins is their security or to be straightforward, their lack of security. The buying, selling, and transfer of Bitcoins whether as payment for services rendered or goods sold takes place online. Bitcoin miners and wallet providers use encryptions and other security measures to ensure that transactions are secure and Bitcoins held are safe.
However, cybercriminals are a viable threat. Investing in Bitcoin could lead to loss of money as witnessed in 2016 when a cyber attack led to the theft of 120,000 Bitcoins worth millions of dollars. Therefore, before you invest in Bitcoin, understand that it is not secure and you could lose your money anytime.
2. Value Fluctuation
Bitcoins can be profitable if you have long-term investment plans. Nevertheless, it is impossible to determine or predict whether buying them would lead to the massive profits that lure many buyers or cause loss of your money.
Two or three years ago the value of one Bitcoin was less than the price of a pizza. At the beginning of 2017, one Bitcoin was valued at less than $800, but in early September it was traded at $5000, and a fortnight later the price dropped to $3200. Such fluctuation in the value of Bitcoin is not suitable for investment.
A good investment requires stability and consistent growth. Nonetheless, if you invest in Bitcoin it is possible to buy them when one has a value of $3000 expecting it to rise to $4000, but instead, it reduces to $1000. Such fluctuation in the value of Bitcoin and other cryptocurrencies could cost you a fortune.
3. Lack of Regulations
Bitcoin and other cryptocurrencies are not regulated by any government, even though some influential individuals in the USA and other countries recognize them as currency. The fact that Bitcoins are unregulated increases the interest of investors because those who are well moneyed can control the industry. The problem with uncontrolled currency is that a slight interference from a government could lead to massive losses.
An incident like the one witnessed in Japan when the government termed Bitcoin as legal tender resulted in the price of Bitcoin dropping dramatically. While the unregulated nature of Bitcoin may be the key to its profitability, it also means that investors are not protected.
Hence, investing in Bitcoin means that your money is not protected in any way. If fewer Bitcoin miners and chain blocks remain in the trade, then the value of Bitcoin reduces and you lose your investment.
Thus, you should desist from investing in Bitcoins. Nonetheless, if you want to try investing in cryptocurrency then invest a small amount that will not make a difference in your wealth if lost. As much as the interest in Bitcoin investment is increasing, do extensive research before deciding to invest.
Reference Links :
https://www.theguardian.com/money/2017/oct/01/will-bitcoin-ever-be-safe-investment-gamble Not Specified