Pros and Cons of Investing in Bitcoin

All types of investments have advantages and disadvantages. The important thing to keep in mind is that you should know what the pros and cons are so you can take calculated risks. This is most especially true if you want to start investing in Bitcoin.

Bitcoin is a digital currency that has achieved success in the world of cryptocurrency. It was first released in 2009, but its value started rising in 2013. Today, one coin is valued at roughly USD $10,000.

Although Bitcoin has been around for several years now and it may be the most stable cryptocurrency in the market, you still need to keep on learning because it’s a high-risk investment.

If you’re a newbie in Bitcoin trading, you need to learn all you can about this cryptocurrency before buying your first coin. There are also tools, such as the Bitcoin Code, that could help make trading easier. However, you need to read the full review of Bitcoin Code before using it.

Without further ado, here are some of the pros and cons of investing in Bitcoin that you should know:

Pros of Investing in Bitcoin

  1. You’re protected from payment fraud. It’s impossible to create a fake Bitcoin. After a coin has been mined or sold, the transaction will be recorded in ledgers throughout the blockchain. If you’re collecting payment in Bitcoins, you can be fairly sure that you’re not receiving fake coins.
  2. Identity theft is almost impossible. When you have to send a payment using your credit card or debit card, the process is that you allow the credit card merchant to have access to your credit line because the store needs to “pull” a certain amount of money from your account. The process with Bitcoin payment is entirely different. The person sending payment through Bitcoin will send only the exact amount that’s required of him. He will only need the public digital wallet ID. There’s no need to give anybody your name or other personal information.
  3. User anonymity. As mentioned, Bitcoin users only use public keys when they need to trade or send payment. For this reason, there’s no need to use names or any other personal information when doing transactions. This means that all your Bitcoin transactions will be anonymous and no one will know any of the transactions you’ve ever made. So, if you’re looking for an investment and spending that investment anonymously, Bitcoin could be for you.
  4. No centralized authority. No one has control of your Bitcoin except for you. Governments or central banks will never regulate this cryptocurrency and no middleman is involved when you make a transaction. The developer intended it to work this way so Bitcoin users have financial freedom. This is one of the reasons why Bitcoin has become popular among investors.
  5. Lower fees. When you send money to friends or relatives who live in another country and you use your bank or a company that provides the same type of services, the processing fee is usually very high. The beauty of Bitcoin is the fact that if you want to transfer your coin to known entities, you may not have to pay for anything. If the exchange service does let you pay, the amount is still way lower than that of a bank.
  6. A limited number of Bitcoins. The Bitcoin developer made sure that the number of coins that will be mined in total will not exceed 21 million coins. This means that when all the bitcoins have been mined, and the demand is still high, the value of Bitcoins is simply going to go higher. If the value does go down at some point, it will not be significant.

Cons of Investing in Bitcoin

  1. Bitcoin is a high-risk investment. The value of Bitcoin is decided based on the buying capacity of the peer-to-peer network, which makes it unstable and a huge risk. Keep in mind that it’s not regulated by any central authority, so the price can significantly crash. However, the value can also skyrocket overnight.
  2. Transactions are irreversible. Once a transaction has been confirmed and completed, there’s no way you can reverse it. If someone tries to scam you and you sent payment their way, no matter what you do, you can never get your money back. There’s no one to file a complaint to, not even the creator of Bitcoin.
  3. Lost keys mean you also lose your coins. When you start investing in Bitcoins, you’ll need to open an account where you can store your coins. This is called a Bitcoin wallet. In that wallet are your public and private keys that’ll enable you to use your Bitcoins.

However, if you lose the key to your wallet and you don’t have a backup, there’s no way for you to access your Bitcoins. It will stay there in your wallet for all time.

  1. Restrictions in the future. Today, Bitcoin is not regulated by any government, but this doesn’t mean that it will not be in the future. They may decide to regulate it if they prove that Bitcoin is being used for illegal activities, such as money laundering and buying illegal drugs. If this happens, the value of Bitcoin could significantly decrease.

Conclusion

There are a lot of Bitcoin investors that have made a significant amount of money through trading. Because of their success, Bitcoin has gained the attention of almost all businessmen as well as cybercriminals. If you’re trying to decide whether or not to buy Bitcoins, or accept Bitcoins as payment for goods and services, you should try to limit the risks.

Lowering the risk when you invest is one of the main goals. This is why it’s crucial that you know the pros and cons of investing in Bitcoins. When you know the circumstances that could affect the value of Bitcoins, you could make a better decision by calculating the risks. You’ll have to decide whether to sell your Bitcoin when the price goes down or hold on to it because you know the trend.

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