Last week, we saw the virtual currency bitcoin soaring all-time high to $20,000, but yesterday itself it reached back to $12000. A margin drop of $8000 in just five days!
Now, this is one incidence, just to let you know how volatile these bitcoins or any Cryptocurrency are, as compared to other trading commodities.
But what I find as the primary reasons you should avoid investing in Bitcoin or ethereum are:
● Unregulated and not-recognized in majority:
Cryptocurrency investment involves a considerable risk. Bitcoin trading is not easy to analyze and hence to predict the right time to invest is not easy at all. The use of Blockchain and encryption that allows quick anonymous transfers makes it even difficult to understand the concept. Most people that spend a significant amount in Cryptocurrency like bitcoin or ethereum end up in a loss. Why? Because they are not clear on the concept; how the Price fluctuates, why is there a difference in buy and sell price or what factors affect the price change.
● Doubtful origin and working background:
There is not much of awareness about the origin of the Bitcoin because of which people don’t have clarity about the manner in which this cryptocurrency functions. Many people believe cryptocurrency to be nothing but a bubble that will eventually break. However, there are others that consider it as a constant growing currency. The sheer fact that’s it’s a virtual currency that has no real existence, makes it all the more doubtful for some.
● Not legalized:
Cryptocurrencies such as bitcoin or ethereum are not sanctioned in most countries. Neither are their transactions regulated by any bank or recognized exchange. These are transacted through e-wallets. If the wallet or trading site decides to cheat you and steal away your bitcoins, then you have nowhere to go. You cannot file a lawsuit or legal complaint to win your money back. This is one serious issue that makes people not to trust such investment options.
● Challenges of Acceptance:
Another major problem of using bitcoin is that it is not accepted at various locations and websites. There are only a handful of places or sites that allow bitcoin or other cryptocurrencies. However, the ones that do, they charge high fees for the transactions. Due to this, people do not find it exciting or are either not very eager to use bitcoin for payments.
● Prone to hacking:
Well, there is an algorithm that works behind the bitcoin or ethereum. Such algorithm is hard to understand. Also, the concept of mining cryptocurrency is tough. Bitcoin is very much prone to hacking. Now, people who are tech savvy or have good knowledge of such algorithm they hack it to mine it. It’s not ethical, but people do it; another reason why people avoid investing in such things. If your account gets hacked, you can end up losing a significant amount of your hard earned money. Although there are many ways by which you can increase the security of your account however hackers use of a lot of tricks such as phishing to steal away the account details.
Well, I guess now it will be apparent to you why you should not be investing in cryptocurrency. Probably the very concept of a working algorithm and understand the nature of currency is the most significant problem. Cryptocurrency is neither a stock nor a currency or even an existing thing. Such an ambiguity in nature makes it very much doubtful.
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