2. 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withdrawn from bank accounts it created a huge
uproar that was felt around the world. If
consumers did not have access to money how could
they buy and sell the things needed to carry on in
our modern world? The reality is they cannot so
consumers around the world started to look for
safer alternatives to fiat currency. Fiat currency is
currency that has no tangible value aside from
what the government assigns to it.
3. Consumers are looking for a way to store their buying
power to protect themselves from having bank accounts
frozen for indefinite periods of time. Many people
started trading in Bitcoins. This is a crypto-currency
which means it cannot be easily counterfeited but before
anyone starts buying into this new currency it would 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
dealing with Dollars,Euros or Pounds you have the
assurance that the government behind it will honor the
debt while Bitcoins do not provide any guarantees at all.
The fact that no one truly knows who made this currency
so there is no way of knowing whether it could be stolen
right from under our eyes.
4. These Bitcoins are stored inside a digital wallet that can
be encrypted on your computer. While this should
provide a sense of security if your computer is lost your
Bitcoins are gone as well. It is not like a credit card
where you can get a replacement and carry on like
nothing has happened.
While the security of this currency is a concern by far the
biggest worry is the value of it. The perceived value of a
buy bitcoins can change in a moment and unlike fiat
currencies that are backed by hard assets owned by a
country if a Bitcoin value drops you have nothing of
value at all.
5. There are a few exchanges around the world that sell and
buy Bitcoins, but you should not buy them thinking they
are going to rise in value. They are 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 do not have any real security
with Bitcoins since they are not provided by a
government. The value if highly volatile and could be
reduced to zero in a heart beat and the simple fact that
the currency has only been around for a few years shows
it is not proven to be reliable.
6. If you are looking for a way to preserve value then
precious metals like gold,silver and platinum may be
more beneficial since they have been used for centuries
as a medium of exchange.
When it comes to investing you should never make rash
decisions but weigh the risks and potential payoff and
remember that there is no sure things when it comes to
digital currencies like Bitcoins so approach at your own
risk.
7. If you are looking for a way to preserve value then
precious metals like gold,silver and platinum may be
more beneficial since they have been used for centuries
as a medium of exchange.
When it comes to investing you should never make rash
decisions but weigh the risks and potential payoff and
remember that there is no sure things when it comes to
digital currencies like Bitcoins so approach at your own
risk.
