Thinking if you should invest in Bitcoin? If you’ve been around any kid of financial information lately, you’ve no doubt heard about the particular meteoric rise in the world’s most well-known cryptocurrency.
And if you’re like a lot of people right about now, you’re possibly wondering, “Bitcoin – yes or no? ”
Should you invest? Is it a great option? And what the heck is definitely Bitcoin anyway?
Well here’s a few things you should know about Bitcoin before you commit. Also note that this article is for information purposes only and should not be accepted as any kind of financial advice.
What is Bitcoin?
Bitcoin is known as a cryptocurrency or a digital currency. It’s basically online cash. Like any currency you can exchange this for other currencies (like say, buy bitcoins with US dollars or even vice versa) and it fluctuates pertaining to other currencies as well.
Unlike additional currencies however it is decentralized, which means there isn’t any one central bank, nation or government in charge of it.
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Which means it’s not as susceptible to federal government or central bank mismanagement.
Benefits of Bitcoin
#1 Easy To Deliver Money
Because it’s decentralized, this actually 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 bank intermediary (and pay the banking 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 Limited 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 such as saying a government cannot print out money because there is a limited supply of bills – and they won’t print any more.
When there is a set supply your purchasing 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 currency that can be printed – or inflated – into infinity at the impulse 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.
However your name and identifying details at the rear of the transaction are not seen. Every transaction is linked to an address – a string of textual content and characters. So while individuals might see your address – there is no way to link that address to you.
Many people who don’t like their banks spying on them (or telling them just how much of their own money that they can or cannot move), really like this privacy feature.
#4 Cheaper to Transact
A lot of businesses have to take Visa or Master card these days to stay competitive. However these types of cards take some rather considerable fees out of each sales transaction.
But a merchant who accepts Bitcoin doesn’t pay these hefty fees – so it puts more income in their pockets.
So those are some of the main pros of Bitcoins. What about the cons?
Cons of Bitcoin
#1 Risky – Price Variances
Bitcoin is famous for rising slowly over months – and then falling 20 – 50% over a couple of days.
Because it’s being traded 24 hours a day 7 days a week, the price is always fluctuating. And all it takes it some bad information – like the news of the Mt Gox hack a few years ago – to send the price tumbling down.
Therefore basically it’s not stable – plus there are a lot of unknowns out there that can affect the price. The rule here is this particular: don’t put any money into Bitcoin that you can’t afford to lose.
#2 Slowing Transaction Speeds
Bitcoin is definitely starting to run into problems with slower deal speeds and higher transaction charges. 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 can expect the price to be extremely volatile.
#3 Bitcoin Transactions Not Reversible
In contrast to a credit card charge, Bitcoin transactions aren’t reversible. So if you send Bitcoin to the wrong address – you can’t get it back.
Also, there are a lot of tales from people who have lost their Bitcoin finances address (through hacking, phones being stolen, 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 shop your coins properly if you want to invest in 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 to change financial transactions as we know this – there is still a lot of risk. There are a lot of unknowns out there still.
Should you choose decide to buy, take your time and research your options. Don’t 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.