Once the central bank in Cyprus froze bank accounts and limited the sum of money that may be withdrawn from bank accounts it created an enormous uproar that was felt around the world. If consumers did not have usage of money how could they buy and sell the things needed seriously to continue within our modern world? The stark reality is they cannot so consumers around the world started to find safer alternatives to fiat currency. Fiat currency is currency that’s no tangible value apart from what the government assigns to it.
Individuals are buying way to store their buying power to safeguard themselves from having bank accounts frozen for indefinite periods of time. Lots of people started trading in Bitcoins. This can be a crypto-currency meaning it cannot be easily counterfeited but before anyone starts buying into this new currency it will be prudent to understand the risks.
Bitcoins are not issued by any central bank or government so there is no accountability whatsoever. If you are working with Dollars,Euros or Pounds you’ve the assurance that the government behind it will honor the debt while Bitcoins don’t provide any guarantees at all Buy bitcoin. The fact no-one truly knows who made this currency so there is no method of knowing whether maybe it’s stolen from under our eyes.
These Bitcoins are stored inside a digital wallet which can be encrypted on your own computer. While this would provide a feeling of security if your personal computer is lost your Bitcoins are gone as well. It is in contrast to a credit card where you are able to get an upgraded and continue like nothing has happened.
While the security with this currency is just a concern definitely the biggest worry is the value of it. The perceived value of a Bitcoin may change in a moment and unlike fiat currencies which can be backed by hard assets owned by a nation in case a Bitcoin value drops you’ve nothing of value at all.
There are certainly a few exchanges around the world that sell and buy Bitcoins, but you should not purchase them thinking they are going to rise in value. They’re a digital commodity which some would classify as a “fad “.Tomorrow it could lose all its real value and never recover.
So to recap the risks, you don’t have any real security with Bitcoins as they are not provided by a government. The value if highly volatile and might be reduced to zero in a heart beat and the straightforward proven fact that the currency has only existed for some years shows it is not shown to be reliable.
If you are buying way to preserve value then precious metals like gold,silver and platinum may be much more beneficial since they’ve been used for centuries as a moderate of exchange.
As it pertains to investing you must never make rash decisions but weigh the risks and potential payoff and remember that there surely is no sure things in regards to digital currencies like Bitcoins so approach at your personal risk.