We as humans have come a long way, from cash to credit and debit cards and now bitcoin. Bitcoin is the digital currency system with no central authority. Yes, no bank or anything is there to be blamed when anything goes wrong. The transactions are done between individuals and the currency I kept save in a wallet.
Bitcoin is a hot topic these days because of its boom period, but the boom is just because of its increased demand. Everyone wants to ride this rollercoaster. But there are some reasons for which you should not invest in bitcoins and here are those.
- NO UNDERSTANDING, NO INVESTING
Before investing in any market, the first rule is to understand every single thing related to it. So, if you have a clear understanding of what you are up to than I am no one to stop you but if you don’t then go for research.
Some people do not understand this cryptosystem at all yet invest in it just because it seems to be a good investment, but it would not last for you as you are unaware of the hazards it brings. Do not be a part of the herd just because it is trending.
- NOT BACKED BY ANYONE
As mentioned earlier, Bitcoin is not backed up by any force; it is all you and the other person you are dealing with. That person could be a fraud and you would have no idea.
The currency we are using is monitored by our government. We know a governing body is out there to help us out in need of being the party in charge. We often criticize our government and banks so much and for so many reasons but here we have got to accept the fact that these regulatory bodies give us a sense of security while we are dealing out in the open.
- HIGHER RISK OF FRAUD
When no regulatory body is present to regulate our affairs and transactions are done anonymously, there is a high risk of fraud. It is a heads up for anyone who has involved themselves with this new form of currency than try not to trust anyone in the business because you do not have the means to get back to them.
When you at this side of the screen you cannot be sure if the person on the other side is a realtor, industrialist or a felon.
- NEITHER CURRENCY NOR COMMODITY
Bitcoin is not an actual currency; you do not see it or touch it. Bitcoin may be the global currency but not everyone is familiar with the concept, and not everyone is using it.
Let me ask you one thing, why do we earn? Why is money important? To buy stuff, right? But if the currency you are going crazy about cannot buy you commodities, there is a list of very few things that could be purchased by Bitcoin other than that it is of no use.
It is not like buying or selling gold that would make a good investment and come handy when in need.
- TOO MUCH RISK
There is still a lot that we do not know about this currency type. Analysts across the world say they are unable to provide a proper review as they are not familiar with the ecosystem.
To be rich and an entrepreneur we have always heard that being a risk taker is everything but taking risk does not mean being vulnerable. Take risks but be efficient and if possible divide your risk in different domains.
Author Bio: Sarah Smith has been a personal finance author for the last five years. She is also an independent and very passionate finance and investment advisor. She regularly posts at www.personalincome.org.