Bitcoin has attracted a lot of buzz in the media recently. It’s a computer-based currency that governments can’t trace, which has some people very interested. Bitcoin is a brand new kind of medium of exchange, and most people don’t know whether it is worth investment or not. Here’s a list of some pros and cons of this crypto-currency to get you thinking:
Invest In Bitcoin Because Of Its Independence
Bitcoin exists outside of national governments. That means that no government can track it, issue it, rescind it, stockpile it, or control it. That can be helpful for a number of reasons. For example, some people live in areas with unstable governments, or where the government controls the local currency and makes it hard to buy outside goods. Bitcoin isn’t subject to the vagaries of government policy.
Because It Grows In Value
Bitcoin’s value in dollars has climbed as interest in the currency grew over time. More interest translates into more demand, which increases the price of a Bitcoin. That means that aside from its other features, Bitcoin has become an asset for investment like any other- buyers can hold onto it and hope that it will be worth more than when they bought in. It has risk like any other asset, but it might just be worth some money to see if it really takes off.
Because It Might Be The Future
There’s a chance, however small, that Bitcoin becomes the way people do business: Bitcoin might replace other currencies in all transactions. If that happens, it would certainly be better to be holding Bitcoins rather than dollars or euros. Again, this is by no means guaranteed, but Bitcoin does hold the potential to change the way people buy and sell. If it transforms the financial landscape, it will be a very nice thing to own.
Don’t Invest In Bitcoin Because It Is Unstable
Without any backing or government support, the value of Bitcoin can fluctuate wildly based on rumors, big purchases, and other issues. Having a currency that is just as volatile as a stock is a recipe for confusion. Why get into something when you have no idea how much it will be worth in a month? It might double in value or crash to zero. At least with stocks, you can spread out the risk and diversify.
Because It Is Unsafe
Bitcoin, and the exchanges on which people trade it, periodically undergo more or less successful hacking attempts. The exchanges also occasionally shut down, leaving all participants without their money. You are never quite sure if your Bitcoins are safe, or that nobody has found a clever way to duplicate them. The more interest they attract, the more they will be the target of fraud.
Because It Is Not Real
Bitcoin does not represent a real-life asset. Having a Bitcoin worth $250 does not make you $250 richer until you manage to find a person willing to give you $250 for your Bitcoin. You cannot trade it in for a stock, a metal, or anything else. It has no value aside from market whims.
Remember that all investments have risk, and also that with risk comes reward. Choose for yourself: it’s certainly an exciting time!