So you’re craving to buy bitcoin, great idea!! But do read this before you get to that !!!
Just a basic insight first
Bitcoin is a digital currency which is decentralized. With decentralized what I mean is that this digital currency doesn’t need any banks or regulatory authority for its regulation or transaction. Bitcoin is based on a Distributed digital ledger system called Blockchain. Blockchain powers not only Bitcoin but there are many more digital currency out there on internet, the bitcoin being the most popular one. From the time when it was first introduced the price of bitcoin has grown up by extremely high margin, for which it is getting more fame day by day.
The recent run-up in the price of Bitcoins, has intensified people’s attention towards world of cryptocurrency. Bitcoins has become the topic of gossip and interest among people. More and more people are craving to invest in Bitcoins and get their hands on with this digital currency.
“Bitcoin is money, bitcoin is future of economy, future of currencies blah, blah, blah.” With all these kinds of news stuff going around, it is very hard to underestimate the impact of Bitcoin in our economic decisions, whether at present or in near future. People are finding all possible opportunities to invest in bitcoins without having the proper research and knowledge about the stuff they are being involved with.
When people compare the bitcoin (the most popular one among the crypto currencies) with say US Dollar or gold or with some kind of assets, which may be true to some extent as they share some similarities but the thing that people neglect that the dissimilarities between them outweigh the similarities between them. So comparing the bitcoin with above mentioned stuffs is not kind of worth it.
For example say you have 10$ bill today, you kept under your mattress for 10 years. After 10 years you took it out, so what would it be its value still 10$ right, of course there are chances that inflation will decrease its value but that is still negligible, so it’s still 10$ right. Well that isn’t the case with bitcoins, you buy today bitcoin for say 15000$, (whoa you got your first bitcoin, cheers!!) now get a good night sleep and wake up, there are chances that your bitcoin value has increased to say 17000$ or your bitcoin has fell to say 1000$. Risky right? Well yes!!
Well what it means is that the Bitcoin is extremely volatile, and when bitcoin is showing signs of a bubble, it is very hard estimate the risk associated with it. A Bubble in financial term refers to a situation where the value of an assets exceeds its fundamental rational value by large margin. In simple terms the problem with bubble is that, just like a real water bubble can pop up any time these financial bubble can also popup anytime, meaning that the value of asset can suddenly fall to extremely low. So, buy bitcoin at your own risk.
Bitcoin is Crypto-currency and crypto means secure right??? Well not so fast, bitcoin has proven itself to shockingly easy to steal and more easy to loose. There are even instances where the bitcoin exchanges have been hacked and information of users have been compromised. There are still too many loopholes in the bitcoin and there are happy moles out there trying to stick their heads into those holes i.e. security flaws. Keep this in mind to before diving into the world of crypto currency.
According to Todd Haselton from CNBC
“I owned bitcoin for a weekend and here's what I learned
• I bought bitcoin and held it for a weekend.
• It fluctuated a lot, for reasons I couldn't always understand.
• I sold my bitcoin and probably won't buy it ever again.”
“Andrew Bailey, chief executive of the Financial Conduct Authority, told BBC's "Newsnight", "If you want to invest in bitcoin, be prepared to lose all your money"
Bitcoin's meteoric price rise has stunned critics and enthusiasts alike, leaving investors scrambling to understand the driving factors for the digital currency's runaway rally.”
Another problem with Bitcoins is that they are not accepted everywhere. Except for the few countries that have legalized Bitcoins, the bitcoins transactions are banned in the most of the country. And the reason behind this ban is the fact that any online currency is hard to monitor and regulate. Even though there are bitcoins wallets and bitcoins card that gives you more accessibility with bitcoins, but in many countries you may still get yourself in trouble just because you transacted in bitcoins. So used it at your own risk.
With all these underlying problems bitcoin has still proven its potential in the market, thus it can be worth a try but remember don’t carry a risk that you can’t bear loss for. Stay cool, stay aware and best of luck
That’s all for today
See you all in my next post!!!
HAPPY NEW YEAR 2018
JUST IN CASE YOU WANT TO READ HERE'S LINK TO MY PREVIOUS POST
https://steemit.com/introduceyourself/@rkshah/namaste-folks-let-me-introduce-you-to-me-and-my-journey