Wanting to know if you should invest in Bitcoin? If you’ve existed any kid of financial news 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 most likely 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 you should know about Bitcoin before you spend. Also note that this article is for info purposes only and should not be taken as any kind of financial advice.
What is Bitcoin?
Bitcoin is known as a cryptocurrency or a digital currency. It’s basically online money. Like any currency you can exchange this for other currencies (like say, buy bitcoins with US dollars or vice versa) and it fluctuates in relation to other currencies as well.
Unlike other currencies however it is decentralized, which means there isn’t any one central bank, country or government in charge of it. Which means it’s not as susceptible to government or central bank mismanagement.
Pros 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 in seconds without having to go through a bank intermediary (and pay the banking fees).
This fact alone makes Bitcoin very popular. Instead of waiting for the wire transfer which can take days, you can send your payment in seconds or minutes.
#2 Limited Supply
There are only 21 mil Bitcoins that will ever be mined. This limits the amount of Bitcoin that may ever be produced. This is like saying a government cannot printing money because there is a limited supply of expenses – and they won’t print anymore.
When there is a set supply your buying power is preserved and the currency is immune to runaway inflation.
This limited supply has also assisted to contribute to the rise in the cost of Bitcoin. People don’t want a foreign currency that can be printed – or overpriced – into infinity at the impulse of a greedy government.
Most people think that Bitcoin is completely unknown. 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. Each transaction is linked to an deal with – a string of textual content and characters. So while individuals 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 still cannot move), really like this privacy function.
#4 Cheaper to Transact
Many businesses have to take Visa or Master card these days to stay competitive. However these cards take some rather substantial fees out of each sales transaction.
But a merchant who accepts Bitcoin doesn’t pay these significant fees – so it puts more money in their pockets.
So those are some from the main pros of Bitcoins. How about the cons?
Cons of Bitcoin
#1 Risky – Price Fluctuations
Bitcoin is famous for rising slowly over months – and then falling 20 – 50% over a couple of days.
Mainly 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 news – like the news of the Mt Gox hack a few years ago — to send the price tumbling down.
So basically it’s not stable – plus there are a lot of unknowns out there that can impact 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 starting to run into problems with slower transaction speeds and higher transaction fees. Other cryptocurrencies have come along which are faster and cheaper.
The Bitcoin miners are working on the problem. Nevertheless 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 budget address (through hacking, phones being stolen, virus-infected computers, etc . ) and 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 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 to change financial transactions as we know it – there is still a lot of risk. There are a lot of unknowns out there still.