Questioning if you should invest in Bitcoin? If you’ve existed any kid of financial information lately, you’ve no doubt heard about the particular meteoric rise in the world’s many well-known cryptocurrency.
And if you’re like a lot of people right about now, you’re possibly wondering, “Bitcoin – yes or any? ”
Should you invest? Is it a great option? And what the heck will be Bitcoin anyway?
Well here’s a few things should know about Bitcoin before you make investments. Also note that this article is for details purposes only and should not be accepted as any kind of financial advice.
What is Bitcoin?
Bitcoin is known as a cryptocurrency or an electronic currency. It’s basically online money. Like any currency you can exchange it for other currencies (like state, buy bitcoins with US dollars or vice versa) and it fluctuates in relation to other currencies as well.
Unlike some other currencies however it is decentralized, which means there isn’t any one central bank, nation or government in charge of it. Which means it’s not as susceptible to federal government or central bank mismanagement.
Benefits of Bitcoin
#1 Easy To Send Money
Because it’s decentralized, this also means that you can send a friend Bitcoin (money) on the other side of the world within seconds without having to go through a financial institution intermediary (and pay the financial fees).
This fact alone can make Bitcoin very popular. Instead of waiting for the wire transfer which can take days, you can send your payment in seconds or minutes.
#2 Restricted Supply
There are only 21 million Bitcoins that will ever be mined. This limits the amount of Bitcoin that may ever be produced. This is like saying a government cannot print money because there is a limited supply of bills – and they won’t print any longer.
When there is a set supply your buying power is preserved and the foreign currency is immune to runaway inflation.
This limited supply has also helped to contribute to the rise in the price of Bitcoin. People don’t want a foreign currency that can be printed – or inflated – into infinity at the whim of a greedy government.
Most people think that Bitcoin is completely anonymous. But actually it’s not anonymous : it’s more private. All Bitcoin transactions ever made can be seen on the Blockchain – the public Bitcoin ledger.
But your name and identifying details behind the transaction are not seen. Every transaction is linked to an tackle – a string of textual content and characters. So while people might see your address – you will not link that address to you.
Many people who don’t like their banks spying on them (or telling them how much of their own money that they can or can not move), really like this privacy feature.
#4 Cheaper to Transact
Several businesses have to take Visa or MasterCard these days to stay competitive. However these types of cards take some rather significant fees out of each sales transaction.
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But a merchant who accepts Bitcoin doesn’t pay these hefty fees – so it puts more income in their pockets.
So those are some from the main pros of Bitcoins. How about the cons?
Cons of Bitcoin
#1 Risky – Price Variances
Bitcoin is famous for rising slowly more than months – and then falling 20 – 50% over a couple of days.
Because it’s being traded 24 hours a day seven days a week, the price is always fluctuating. And everything it takes it some bad information – like the news of the Mt Gox hack a few years ago : to send the price tumbling down.
So basically it’s not stable – and there are a lot of unknowns out there that can affect the price. The rule here is this: don’t put any money into Bitcoin that you can’t afford to lose.
#2 Slowing Transaction Speeds
Bitcoin will be starting to run into problems with slower transaction speeds and higher transaction fees. Other cryptocurrencies have come along that are faster and cheaper.
The Bitcoin miners are working on the problem. However until these issues are resolved, you could expect the price to be extremely volatile.
#3 Bitcoin Transactions Not Reversible
As opposed to a credit card charge, Bitcoin transactions are not reversible. So if you send Bitcoin to the wrong address – you can’t get it back.
Also, there are a lot of tales through people who have lost their Bitcoin wallet address (through hacking, phones theft, virus-infected computers, etc . ) and they’ve completely lost their cash. There’s no way to get them back.
For this reason, you really need to know what you’re doing and take the time to research how to buy and store your coins properly if you want to invest in Bitcoins – or any other cryptocurrency.
So those are some of the things to consider prior to investing in Bitcoin. Basically while Bitcoin has a lot of great things choosing it – and while it has the potential to change financial transactions as we know this – there is still a lot of risk. There are a lot of unknowns out there still.
If you decide to buy, take your time and research your options. May buy from just any seller. Some of them are trustworthy and run an excellent business. But there are others that will overcharge you and may not even deliver your own coins.
Be safe and do pursuit first. Find a trusted seller using a stellar reputation – there are numerous of them out there. And remember the fantastic rule here – never invest more than you can afford to lose.