Digital currency is the future of next generation. Trading and doing business online and doing business online is future. Bitcoin, Libra, Ripple, Altcoin, Litcoin are some of the digital currencies were popular among people and people are today more interested in investing in these digital currencies as compared to the stock-market. So, it will be no shock if crypto-currency replaces the government backed paper currency one day.
Bitcoin is the most trusted and famous crypto-currency among all the digital currencies that I mentioned above. People invest hugely in this crypto-currency. Let me tell you that despite its popularity there are also huge amount of risks surrounding the investment of Bitcoin.
In this article I will talk about all those risks and how to avoid them:
The volatile nature of Bitcoin.
The unstable and volatile nature of Bitcoin keeps changing constantly. Let me tell you that the value of one Bitcoin on November 2018 was worth $6,461.01, which reached to $ 24000 on December, but sadly enough just a couple of weeks later, the price of Bitcoin dropped to 14000 $ and the investors had to sell their Bitcoin in huge loss. In such a unstable market you can never say that when is the right time to buy or sell Bitcoin or even if you will get back your investment. All you can do is to keep hawk’s eye on the market trend and invest small amount.
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Ok, this is something that is bound to happen when you are dealing with something like online trading. So, you must keep in mind that hacking is a serious risk when it comes to crypto-trading. Many traders accounts get’s hacked and their wallets and investments are lost. Sometimes even the smart wallets are hacked so be careful to research and select the most reliable and secure wallet to store your bitcoins.
No rules and regulations.
Bitcoin is a free, independent currency without any kind of restrictions. Government and banks has no say over how Bitcoin functions. The reason is people are still exploring the Bitcoin and the market is very new. People do not have to pay taxes for their Bitcoin earnings? But for how long? World is constantly undergoing changes. Who knows that state of Bitcoin in upcoming years?
Only works around technology.
Bitcoin is a digital form of currency that has it’s existence only due to technology. It is mined digitally, stored in smart e-wallets and transferred online. Without technology Bitcoin has no existence. Whereas the traditional paper currency, property, gold you own something that can be exchanged. Same is not the case with Bitcoin that is very prone to cyber-threats and hacking.
You must have known by now that bitcoins are mined and traders who are mining Bitcoin have to solve a Maths puzzle in order to get Bitcoin. Mining pools often uses the computational energy to create and new block and hide it from miners. The reason is pretty simple that a few greedy miners to reap the benefit.
A great loss.
Many people have snubbed Bitcoin as a Ponzi scheme in which few people at the top are enjoying the benefit of people’s ignorance which is leading to creation of a bubble. One day that bubble will bust and then Bitcoin will become useless. Many people by that time would be holding to their precious Bitcoin, hoping to sell it at the right time but failing to upload. It definitely means a big financial loss.