3 reasons to be wary of bitcoin
Right now, people from all over the world are flocking to get even a glimpse of Bitcoin and other cryptocurrencies because it is all the rage right now, but obviously, Bitcoin is the crowd favourite. It has been said that Bitcoin is essentially the currency of the future, so it has been driving up in price because of that, however, many others remain sceptical about this highly volatile form of cryptocurrency. Bitcoin is much like traditional currency and you can also buy it with traditional currency.
It can be used much the same in terms of buying goods and services whether online or in the real world, but people genuinely seem to enjoy just speculating on its price rising. While it is a good choice for investment, it is a well-known fact that Bitcoin is highly volatile which can make it a less than ideal thing to invest in for the faint of heart. Here are three great reasons you should be wary of Bitcoin.
1. No value over time
Contrary to popular belief and what people would usually expect, Bitcoin doesn’t actually produce value over time. Bitcoins price has run up significantly in the past, like a lot, and for the people that say the currency is worthless, it sure does cost plenty to buy even a single Bitcoin. It really isn’t unusual for the price of an asset, such as a stock, to increase over time.
However, an asset such as Bitcoin doesn’t work that way, unfortunately. Bitcoins price only rises when people begin to demand the coin, so it is all a case of supply and demand with Bitcoin. Speculators are only purchasing Bitcoin with high hopes that they will, later on, be able to sell it to others for far more.
2. Volatility
It is no lie at all the Bitcoin is very well-known for its extreme volatility. Bitcoins creators and various fanatics claim that Bitcoin is the future of currency, but due to how volatile it is, that is very highly unlikely at this point. It is widely known that consumers need stability regarding prices when it comes to making purchasing decisions.
For example, if you were to walk into your local grocery store and buy two lemons for $7, yet the next day you went to buy another two and it was $25, and the day after two lemons is $30, you would be upset, right? Not only that, but you would also find it hard to know where to shop and in turn, businesses would have a hard time making financial choices. Even apps such as the Bitcoin Prime app are having trouble with massive market rises.
3. Bitcoin is worthless
Warren Buffett who is an extremely well-known investor says that Bitcoin is essentially worthless, and his opinion should most definitely be trusted. In 2014, he told CBMC “Stay away from it. It’s a mirage, basically. It’s a method of transmitting money. It’s a very effective way of transmitting money and you can do it anonymously and all that.
A check is a way of transmitting money, too. Are checks worth a whole lot of money just because they can transmit money? The idea that it has some huge intrinsic value is just a joke in my view.”
