5 Reasons Why Bitcoin Is A Terrible Investment
Bitcoin has been the first digital currency to gain popularity with consumers, and it now continues to be the highest in terms of market capitalization by a wide margin. Bitcoin is also seen as an intermediate currency on a variety of blockchain trading sites. However, as beneficial as Bitcoin has become to investors, it is a bad gamble. Here are five reasons why one should avoid Bitcoin at all costs.
The false idea of scarcity: Whereas tangible metals, such as gold, are determined by what can be obtained from the planet, the number of Bitcoin tokens is determined by programming. It’s not impossible that programmers, with immense community interest, can decide to raise Bitcoin‘s token cap at some future date. As a result, Bitcoin provides the illusion of scarcity without necessarily being limited. Thus, one of the most significant disadvantages of cryptocurrencies is their lack of protection. Exchanges have been compromised, resulting in a huge loss in digital currencies. Many who retained their tokens on those markets almost lost it all. Bitcoins are not FDIC insured and would not be in the foreseeable future.
The issue with utility: Another issue with Bitcoin is that it has no concrete means of being valued as a currency. For example, if one wishes to buy stock in a publicly held firm, they can examine its financial statements and cash position and make an educated decision. For Bitcoin, there is no credible proof for investors to grasp that tells one something about the valuation or usefulness of Bitcoin. Just 18.51 million Bitcoin currencies are currently in use, with an approximate 40% of these owned by a select group of owners. And with marginal token possession, there are approximately 10 to 11 million tokens in existence that aren’t going to get one very far.
The threat of frauds: Bitcoin raises serious questions over fraud and stealing. For example, inexperienced Bitcoin traders can fail to recognize the importance of storing their cryptocurrencies in a digital wallet, leaving them vulnerable to fraud by hackers. Bitcoin is widely regarded as the currency of convenience for organized crime. Moreover, since Bitcoin is an uncontrolled currency as well. Though the leniency in regulation is a marketing tool for modern crypto enthusiasts as it offers some level of anonymity, it’s extremely harmful if anything goes awry.
Technical issues: Since Bitcoin assets are completely digital, one is often prone to technical problems. When exchanges and markets are crowded, they can become very sluggish. As servers get overloaded, some tokens’ debits and credits are often blocked. Whether one wants to distribute or transfer coins right now, one is at the whim of the trade. At present, Bitcoin has first-mover benefits, but the entry barriers in the crypto industry are particularly tiny. All that is required is patience and coding skills to create blockchain technology, the digital and transparent database that tracks exchanges, and digital tokens to be connected to the network. There’s nothing special about Bitcoin‘s underlying technology that other firms can’t replicate.
Government rules: Some authorities continue to impose restrictions on cryptocurrencies, rendering it more difficult for citizens to obtain them. China is an example of this. Although cryptocurrency is not necessarily illegal in this nation, it does have strict laws that the majority of its citizens must be informed of. Many Chinese citizens are unsure if cryptocurrency is legal or illegal in their country. Cryptocurrencies cannot be exchanged without government approval unless the exchanges favor the actual economy. Since the China cryptocurrency must adhere to regulatory requirements, YuanPay Group is a government-approved dealer of the China currency. In other terms, they can purchase and sell cryptocurrency in China. Thus, if one wants to buy the latest Chinese cryptocurrency, one can use bitcoin trading.
Any unique investment bubble finally bursts. Regardless of how enthusiastic shareholders are about Bitcoin and its corresponding blockchain, evidence shows that it would fall short of meeting lofty standards. All through Bitcoin‘s past, there have been drops of more than 80%. Extreme volatility is unavoidable for cryptocurrencies such as Bitcoin, and precedent suggests that there would be a major drawback from their use.
