Sponsored post by Alex Larsons
There are different opinions about Bitcoin. Irrespective of your stand and take, one thing that people agree with is that Bitcoin has taken over the world by surprise.
There are a good number of investors who believe that this is the next big thing, while others see it as a risky venture. The consistent thing is that Bitcoin seems to be gaining popularity with every passing day.
With the pandemic, a good number of countries ventured into online trading and bumped into Bitcoin.
There are many businesses that have started accepting Bitcoin as a mode of payment for their goods and services. While initially, it was a case of small and medium businesses accepting Bitcoin, bigger brands have started to join the bandwagon.
PayPal, Microsoft, and Tesla are some of the giants in the business world that have given it a nod. With the concerns of the Federal printing money extensively, the virtual currency seems like a better alternative.
Given all this, you may be wondering what action to take. Before taking a firm stand on Bitcoin, let us look at some possible risks.
The volatile nature of Bitcoin is both a pro and a con. The prices keep spiking and plummeting in a drastic manner. For instance, in 2010, Bitcoin was valued at just 8 cents. By 2017, the value was $1,000, and by the end of 2017, it was almost at $20,000.
Just imagine having invested at the beginning of 2017 and closing with the value having grown in such rates? However, about 12 months later, the value had dropped to about $3,500.
The year 2020 was an even a more interesting one as the value of Bitcoin got to about $42,000 and then took a nosedive to about $34,000 in just 24 hours. The highly volatile nature of Bitcoin comes with huge risks and as such, you should tread carefully.
Identity Issues
When you look at Bitcoin, you may be tempted to think of it as gold. However, there are certain traits that make it similar to the USD. You can trade on bitcoindigital.org using Bitcoin as a virtual currency. On other platforms, you can also trade using Bitcoin as a commodity.
Even more confusing is the fact that the IRS considers Bitcoin as property and taxes it. While Bitcoin has been around for more than a decade, there seems to be an identity crisis with this cryptocurrency.
Bitcoin is decentralised, not regulated
Since its inception, Bitcoin has been operating mysteriously without any government, bank, or authority regulating it. This means that it is run in a peer-to-peer network, which has its own fair share of risks.
Some see this as an attractive character as they are at liberty to trade as they wish. However, there is some risk level where there is no regulation or surveillance at all.
Illegitimate Operations
The anonymity of Bitcoin trading makes it the best option for a number of illegal activities. Ponzi schemes, phishing, blackmail, and other forms of cyber crimes are executed using Bitcoin.
However, there are so many other honest traders who use Bitcoin in an honest manner. There is also a risk of hackers taking advantage of unsuspecting victims and ripping them of their hard-earned cash.
Final Thoughts
Bitcoin is a new wave that seems to be polarizing the financial markets. There are many people who are making an honest living through Bitcoin trading. But there are also risks that cannot be ignored. It is advisable to take your time and understand the cryptocurrency world before going in with a huge investment. Most experts advocate for trading with smaller amounts in the initial stages.
