Bitcoin, and the stock market: A generic understanding
Bitcoins have become an increasingly popular medium to perform all kinds of monetary transactions. Needless to mention that in recent times more people are getting to know about them, their efficacy, and their craze is increasing. Trading has become more accessible with the introduction of platforms like cryptocurrency.
Cryptocurrency, in recent times, has made its way steadily and smoothly into the stock market scenario, however raises the question, is Cryptocurrency serving its own purpose at all? Or is it failing in pertaining to the same? In this blog, we will take a look at why Bitcoin is slipping away, as far as the stock market is concerned. Come on; let us now begin!
6 reasons why bitcoin and stock market are incompatible:
- Possibility of cybertheft:
Trading money virtually is prone to cyberattacks and hacking. If such a thing takes place, it is hardly possible to retrieve the stolen bitcoins. They can also get misplaced due to frequent errors on the internet. Even if you have smart protection, it is possible to track and crack bitcoin transactions. It is also possible to lose your bitcoins if you misplace your key by accident or something unavoidable happens.
- Has little or no regulation:
Cryptocurrency is not widely accepted in all places. But it operates without any regulation or taxation. No government has posed a clear stance towards cryptocurrency. But in recent years it is gaining enough ground to tackle government currency. If such a situation persists, it is tough to imagine how the market would look like in a few years.
- Has limited usage:
Bitcoin is an advancement in the technical scenario of the world. It has proposed a different dimension to the idea of currency. Yet, it is not widely accepted in all places as a valid form of currency. Most companies do not consider bitcoin to be a legitimate form of monetary exchange except a few like Overstock, Newegg, Air Lituanica, etc.
- It withholds blocks:
New bitcoins can be created by solving arithmetic problems that are called ‘blocks’. These blocks are created at the time of a transaction. There is a mining pool that can be used to mine a block and disguise it from authentic miners. This prevents the reporting of the new blocks created.
- It is reliant on technology:
Cryptocurrency would be non-existent without technological advancement and the internet. Bitcoin is entirely dependent upon online information, any web crash can hamper your bitcoin treasury. There is no physical backup or collateral involved that would guarantee your investments. Bitcoin is more susceptible to cyber threats and frauds.
- There is a risk of financial loss:
Ponzi scheme is a name given to the bitcoin system. It is because the concept behind bitcoin is benefiting from the lacunas of the honest miner. More people investing in bitcoin increases the bubble of the fake economy of cryptocurrency. But this is not long-lasting. There is no physical return on the investment, hence the financial losses can be huge.
The purpose factor:
Besides the incompatibility factors aforementioned, Bitcoin first came into existence with the aim of making free-floating economic transactions, digitally, and creating equal opportunity for all sectors. However, the investment in the stock market can be pointed out as a point of departure, if one deeply thinks about the same. Though one can’t forget that there are several opinions regarding the matter, and Bitcoin has changed its way over time.
Conclusion:
These are some of the reasons why bitcoin would defeat its purpose if it trades on the stock market. Something that is not sure to exist in a few years cannot be considered into a place including real money. Bitcoin and cryptocurrency as a whole are unstable and risky. It is vulnerable to 51% attack. Make sure to invest your money in the right places and check for fraud every time you indulge in online transactions. Keep your money safe.