When the central bank in Cyprus froze bank accounts and limited the amount of cash that could be withdrawn from bank accounts it created a massive uproar that was felt around the world. If consumers did not have access to money how could they buy and sell the things necessary to bring on in our modern world? The truth is they cannot so consumers around the world started to look for safer alternatives to fiat currency. Fiat currency is currency which doesn’t have tangible value aside from what the government assigns to it.
Consumers are trying to find a way to store their buying power to protect themselves from having bank accounts frozen for indefinite periods of time. Trading in Bitcoins was started by many people. This’s a crypto currency which means it cannot be easily counterfeited but before anyone starts buying into this new currency it will be a good idea to understand the risks.
Bitcoins typically are not issued by any central government or even bank so there’s absolutely no accountability at all. If you’re dealing with Pounds or Dollars,Euros you have the assurance that the government behind it will honor the debt while Bitcoins do not provide some guarantees at all. The simple fact that no one truly knows who made this currency so there’s number way of knowing whether it could be stolen right from under the eyes of ours.
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These Bitcoins are stored inside a digital wallet that can be encrypted on your computer. While this ought to provide a sense of security if your computer is lost your Bitcoins are gone as well. It is not like a credit card in which you can buy a replacement and carry on like nothing has happened.
While the security of this currency is a concern by far the biggest worry could be the benefit of it. The perceived value of a Bitcoin can change in a moment and unlike fiat currencies which are backed by hard assets owned by a country if a Bitcoin value drops you have nothing of value at all.
There are a number of exchanges around the world that sell and buy Bitcoins, however, you shouldn’t buy them thinking they’re going to climb in value. They are a digital commodity which some would classify as a “fad”. Tomorrow it can lose all its actual value and never recover.
So to recap the risks, you don’t have any real security with Bitcoins since they are not supplied by a government. The value if highly volatile and could be reduced to zero in a heart beat and also the simple fact that the currency has just been around for a few years shows it’s not proven to be reliable.
In case you’re trying to find a way to preserve value then precious metals like platinum and gold,silver may be a little more advantageous since they’ve been used for centuries as a medium of exchange.
When it comes to investing you shouldn’t ever make rash decisions but weigh the risks and potential payoff and remember that there’s no sure things when it comes to digital currencies as Bitcoins so approach at the own risk of yours.