Questioning if you should invest in Bitcoin? If you’ve existed any kid of financial news lately, you’ve no doubt heard about the meteoric rise in the world’s many well-known cryptocurrency.
And if you’re just like a lot of people right about now, you’re probably wondering, “Bitcoin – yes or any? ”
Should you invest? Is it a good option? And what the heck is Bitcoin anyway?
Well here’s a few things should know about Bitcoin before you commit. Also note that this article is for info 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 this for other currencies (like say, buy bitcoins with US dollars or even vice versa) and it fluctuates in relation to other currencies as well.
Unlike other currencies however it is decentralized, meaning there isn’t any one central bank, country or government in charge of it. And that means it’s not as susceptible to authorities or central bank mismanagement.
Advantages of Bitcoin
#1 Easy To Send Money
Because it’s decentralized, and also this means that you can send a friend Bitcoin (money) on the other side of the world in seconds without having to go through a bank intermediary (and pay the financial fees).
This fact alone can make Bitcoin very popular. Instead of waiting for a wire transfer which can take times, you can send your payment within seconds or minutes.
#2 Restricted Supply
There are only 21 mil Bitcoins that will ever be mined. This limits the amount of Bitcoin that can ever be produced. This is like saying a government cannot print out money because there is a limited supply of bills – and they won’t print anymore.
When there is a set supply your purchasing power is preserved and the currency is immune to runaway pumpiing.
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 overpriced – into infinity at the whim of a greedy government.
Most people think that Bitcoin is completely private. 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 at the rear of the transaction are not seen. Every transaction is linked to an deal with – a string of text and characters. So while people might see your address – there is no way to link that address to you.
A lot of people who don’t like their banks spying on them (or telling them how much of their own money that they can or cannot move), really like this privacy function.
#4 Cheaper to Transact
Numerous businesses have to take Visa or Master card these days to stay competitive. However these types of cards take some rather significant fees out of each sales transaction.
But a merchant who allows Bitcoin doesn’t pay these big fees – so it puts additional money in their pockets.
So those are some of the main pros of Bitcoins. How about the cons?
Cons of Bitcoin
#1 Risky – Price Fluctuations
Bitcoin is famous for rising slowly more than months – and then falling 20 – 50% over a couple of days.
Since it’s being traded 24 hours a day 7 days a week, the price is always fluctuating. And everything it takes it some bad news – like the news of the Mt Gox hack a few years ago : to send the price tumbling down.
Therefore 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 is usually starting to run into problems with slower deal speeds and higher transaction fees. Other cryptocurrencies have come along that are faster and cheaper.
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The Bitcoin miners are working on the problem. However until these issues are resolved, you may 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 towards the wrong address – you can’t get it back.
Also, there are a lot of tales from people who have lost their Bitcoin pocket address (through hacking, phones being stolen, virus-infected computers, etc . ) plus they’ve completely lost their coins. 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 shop your coins properly if you want to spend money on Bitcoins – or any other cryptocurrency.
So those are some of the things to consider just before investing in Bitcoin. Basically while Bitcoin has a lot of great things going for it – and while it has the potential to change financial transactions as we know it – there is still a lot of danger. There are a lot of unknowns out there still.
Should you choose decide to buy, take your time and research your options. Avoid buy from just any seller. A number of them are trustworthy and run an excellent business. But there are others that will overcharge you and may not even deliver your coins.