(Pixabay Photo)
No matter where you stand on bitcoin, we can agree on one thing: Its polarizing. Some investors believe its the way of the future and others think its a scam.
However, its gaining popularity. Its likely that the coronavirus pandemic accelerated its acceptance by pushing more retail online. Now, more than one-third of small- and medium-sized businesses will take bitcoin as payment.
And even bigger businesses like Microsoft are starting to accept it. Also, fans of bitcoin see it as a safeguard against inflation. And since the Federal Reserve has been printing money left and right, some are getting nervous about the future of the dollar.
You might be wondering: Should I jump on the bitcoin bandwagon, or run in the opposite direction? Here are four risks I want you to consider before taking the plunge:
Bitcoin is one of the most volatile investments you could make
Bitcoin goes through incredible spikes and plummets in value. Back in July of 2010, a year after bitcoin was released to the world, a bitcoin was worth only eight cents.
The value jumped all over the place until it really started to make some waves in 2017. One bitcoin reached a value of $1,000 early on, then zoomed to $5,000 in October, then doubled to $10,000 in November.
By mid-December one bitcoins value was almost $20,000. The bubble finally burst and the value dropped to about $3,500 by November 2018.
But bitcoins value started to skyrocket again in 2020. Just a couple weeks ago, the value of a bitcoin had hit an all-time high of just under $42,000, but then tanked within 24 hours down to $34,863.
Will it continue to grow in value? We dont know. But the reality is that volatility always equals risk. And risk isnt a bad thing, but you need to be aware of what it might cost in the end.
Bitcoin has a bit of an identity crisis
Does bitcoin have more in common with the U.S. dollar or with gold? The answer is both.
While bitcoin is a currency, Uncle Sam has a different take. The Commodity Futures Trading Commission sees bitcoin as a commodity (like gold), while the IRS treats it like property, which means you guessed it they can tax it.
We need to keep in mind that bitcoin is still the new kid on the block. While its been around for over 10 years now, we still dont have any tried and true best practices for building wealth with bitcoin.
Bitcoin is not regulated by any central bank or nation
Bitcoin has been shrouded in mystery ever since it was released in 2009. It operates without oversight from any bank or nation-state, meaning its exchanged peer to peer.
Its like the Wild West of currencies theres no marshal to uphold the law. For some, this is an attractive feature. Others recognize the risk that comes with zero regulation.
Bitcoin is widely used for illegal activity
Since all bitcoin trading is handled anonymously, the cryptocurrency scene is a hot spot for cybercrimes.
All sorts of shady things, from blackmail to phishing to Ponzi schemes to deals done on the dark web, take place using bitcoin.
Of course, there are plenty of upstanding people who use cryptocurrencies as well. But hackers who know a lot more about coding and software than the average Joe can use that knowledge to their advantage, so be careful.
As youve probably guessed, Im not a fan of bitcoin. I would much rather see you invest your hard-earned cash in proven methods for building wealth, like tax-advantaged retirement accounts and growth stock mutual funds.
But if you want to learn more about bitcoin, check out our full blog post on the subject.
The most important thing is to be aware, informed and in control of your financial choices at all times!
Link:
Laying out the biggest risks of investing in bitcoin in 2021 - KTAR.com
- Google removes malware Android apps used to secretly mine bitcoin - April 26th, 2014 [April 26th, 2014]
- Bitcoin exchange MtGox liquidated - April 26th, 2014 [April 26th, 2014]
- Bitcoin Wannabe Litecoin Emerges as Low-Price Challenger - April 26th, 2014 [April 26th, 2014]
- The Worlds First Bitcoin Debit Card Is Almost Here - April 26th, 2014 [April 26th, 2014]
- How does Bitcoin work? - Bitcoin - Open source P2P money - April 26th, 2014 [April 26th, 2014]
- Bitcoin - Wikipedia, the free encyclopedia - April 26th, 2014 [April 26th, 2014]
- The Bitcoin Group #27 - China Bans Bitcoin Again - Politics - Dark Market - Bitcoin VC - Video - April 26th, 2014 [April 26th, 2014]
- Edan Yago - Free Market Bitcoin regulation and Honduras free trade zones.mp4 - Video - April 26th, 2014 [April 26th, 2014]
- Bitcoin vs. Political Power: The Cryptocurrency Revolution - Stefan Molyneux at TNW Conference - Video - April 26th, 2014 [April 26th, 2014]
- Video: Roundup of This Week's Bitcoin News 25th April 2014 - Video - April 26th, 2014 [April 26th, 2014]
- Bitcoin Fredagsbar med Torben Mark Pedersen - Video - April 26th, 2014 [April 26th, 2014]
- Bitcoin and the Internet of Money - Video - April 26th, 2014 [April 26th, 2014]
- Bitcoin for Dummies - Video - April 26th, 2014 [April 26th, 2014]
- Bitcoin runner-up Litecoin emerges as low-price challenger - April 27th, 2014 [April 27th, 2014]
- Bitcoin or Gold? Squawk Walk Taipei- Squawkonomics - Video - April 27th, 2014 [April 27th, 2014]
- Bitcoin Miner AntMiner S1 180 - 200 GH/s Nu in de Aanbieding! - Video - April 27th, 2014 [April 27th, 2014]
- New Bitcoin Documentary: Boom or Bust - Video - April 27th, 2014 [April 27th, 2014]
- Bitcoin May v0.9.1 GitHub Source Code Development Visualization - Video - April 27th, 2014 [April 27th, 2014]
- Atomic-Trade Bitcoin Exchange. AML, BSA, FinCEN compliant - Video - April 27th, 2014 [April 27th, 2014]
- China Bans Bitcoin Again -- Bitcoin the Movie -- Startup for Startups Raises 2,000 BTC - Video - April 27th, 2014 [April 27th, 2014]
- 4/24/14 - Xapo Debit Card, Russia's 1st Bitcoin Conference, Silk Road 2.0 - Video - April 27th, 2014 [April 27th, 2014]
- What is Bitcoin? - Video - April 27th, 2014 [April 27th, 2014]
- David Andolfatto, How Does Bitcoin Work? - Video - April 27th, 2014 [April 27th, 2014]
- Australian Bitcoin traders hit by crash - April 28th, 2014 [April 28th, 2014]
- Bitcoin traders hit by Mt.Gox crash - April 28th, 2014 [April 28th, 2014]
- Market Extra: Bitcoin venture capital money hasnt kept up with buzz - April 28th, 2014 [April 28th, 2014]
- Bitcoin price slips as China steps up regulation - April 28th, 2014 [April 28th, 2014]
- Bitcoin price slips on China regulation - April 28th, 2014 [April 28th, 2014]
- Win .33 Bitcoin ($150 or so, Depending on BTC value) - Meme game for May 1st - Take My Bitcoins - Video - April 28th, 2014 [April 28th, 2014]
- Ron Paul on Bitcoin - Video - April 28th, 2014 [April 28th, 2014]
- btc.sx Bitcoin derivatives platform George Samman clip - Video - April 28th, 2014 [April 28th, 2014]
- 'The Rise And Rise Of Bitcoin' Filmmaker: 'There Is No Answer Yet' - April 29th, 2014 [April 29th, 2014]
- Bitcoin the movie: It just had to happen - April 29th, 2014 [April 29th, 2014]
- Bitcoin Vies with New Cryptocurrencies as Coin of the Cyber Realm - April 29th, 2014 [April 29th, 2014]
- The Bitcoin Meetup - BitcoinMKE Hosts Jeffrey Tucker - Video - April 29th, 2014 [April 29th, 2014]
- MIT Bitcoin Expo 2014 - Video - April 29th, 2014 [April 29th, 2014]
- Bitcoin Expo 2014: Fireside Chat with Dr Gavin Wood - Video - April 29th, 2014 [April 29th, 2014]
- Rise Bitcoin Singapore - Video - April 29th, 2014 [April 29th, 2014]
- Preview: Bitcoin Authenticator - 2FA for wallets - Video - April 29th, 2014 [April 29th, 2014]
- The Bitcoin Group #27 (Live) - China Bans Bitcoin Again - Politics - Dark Market - Bitcoin VC - Video - April 29th, 2014 [April 29th, 2014]
- 4/25/14 - More China uncertainty, Missourian bitcoin warning, BadLepricon malware - Video - April 29th, 2014 [April 29th, 2014]
- Money & Tech at The Rise And Rise Of Bitcoin Afterparty - Video - April 29th, 2014 [April 29th, 2014]
- New Bitcoin student club at MIT will promote the virtual currency - April 30th, 2014 [April 30th, 2014]
- 4/29/14 - MIT Bitcoin Project, Mt Gox revival plan, Mastercard lobbyists & Team Rubicon - Video - April 30th, 2014 [April 30th, 2014]
- BitCoin Dentist GoCoin Fox News Interview - Video - April 30th, 2014 [April 30th, 2014]
- Bitcoin Foundation Election Hiccups -- Pathetic Ohio Bans Bitcoins -- Dogecon SF 2014 - Video - April 30th, 2014 [April 30th, 2014]
- Bitcoin Slips to $420 as BTC China Halts Transactions - Video - April 30th, 2014 [April 30th, 2014]
- MultiSig Plus BitCoin Multi Coin Wallet looks like HUGE INVESTMENT potential! - Video - April 30th, 2014 [April 30th, 2014]
- Bitcoin: what happens when the miners pack up their gear? - May 1st, 2014 [May 1st, 2014]
- Dark Wallet Is About to Make Bitcoin Money Laundering Easier Than Ever - May 1st, 2014 [May 1st, 2014]
- Bitcoin Talk Show #7 -- Skype BitcoinTalkShow to Call in Live! 🙂 - Video - May 1st, 2014 [May 1st, 2014]
- Basic Bitcoin Bitches - Video - May 1st, 2014 [May 1st, 2014]
- Gold standard vs Fiat vs Bitcoin - Truthloader - Video - May 1st, 2014 [May 1st, 2014]
- How to Defund the System: Bitcoin vs. the Central Banksters - Video - May 1st, 2014 [May 1st, 2014]
- Bitcoin, Anarchy and Freedom with Roger Ver - Video - May 1st, 2014 [May 1st, 2014]
- MIT Goes Bitcoin-Wild - May 1st, 2014 [May 1st, 2014]
- Bitcoin Weekly 2014 April 30: Bloomberg adds Bitcoin to their market index, MIT to produce campus-wide bitcoin ... - May 1st, 2014 [May 1st, 2014]
- 'Dark Wallet' wants to make Bitcoin even harder to trace - May 1st, 2014 [May 1st, 2014]
- Bitcoin made simple (video animation) - Video - May 1st, 2014 [May 1st, 2014]
- Jon Matonis: Bitcoin - The future of commerce? - Video - May 1st, 2014 [May 1st, 2014]
- $100 in Bitcoin Going to Every MIT Undergrad - Video - May 1st, 2014 [May 1st, 2014]
- The Rise of Digital Currency - Video - May 1st, 2014 [May 1st, 2014]
- Money Goes Virtual: The Bitcoin Bourse - Video - May 2nd, 2014 [May 2nd, 2014]
- Bitcoin Lights with LIFX - Video - May 2nd, 2014 [May 2nd, 2014]
- Bitcoin: How We Got Here and Where We Are Going - May 3rd, 2014 [May 3rd, 2014]
- 5/1/14 - Larry Summers warns critics, Paym system & Bitcoin Center NYC roundtable - Video - May 3rd, 2014 [May 3rd, 2014]
- On est Connect S2 #07 1/2 : BitCoin et Musique sur Internet - Video - May 3rd, 2014 [May 3rd, 2014]
- MIT Undergrads To Receive $100 Worth Of Bitcoin This Fall - Video - May 3rd, 2014 [May 3rd, 2014]
- Why it only took ME less than 2 minutes to believe in Bitcoin - Video - May 3rd, 2014 [May 3rd, 2014]
- Bitcoin Basics and Regulation Thoughts from NH Liberty Forum - Bruce Fenton - Video - May 3rd, 2014 [May 3rd, 2014]
- PRIMER CAJERO DE BITCOIN EN BIT CENTER DE TIJUANA - Video - May 3rd, 2014 [May 3rd, 2014]
- Yelp adds Bitcoin acceptance to business listings - Video - May 3rd, 2014 [May 3rd, 2014]
- Bitcoin A Terrorist Threat? Counterterrorism Program Names Virtual Currencies As Area Of Interest - May 4th, 2014 [May 4th, 2014]
- How Does Bitcoin Works - Video - May 4th, 2014 [May 4th, 2014]
- 10 Things You Didn't Know About BitCoin - Video - May 4th, 2014 [May 4th, 2014]
- BITCOIN The Future of Money - Video - May 4th, 2014 [May 4th, 2014]
- Bitcoin Miner Review - Video - May 4th, 2014 [May 4th, 2014]
- The Bitcoin Group #28 (Live) - Yelp Lists Bitcoin - MIT Bitcoin $100 - Dark Wallet - Ohio Bans BTC - Video - May 4th, 2014 [May 4th, 2014]
- Bitcoin: Gary North is Mentally Deranged And Bitcoin Will Change Everything - Video - May 4th, 2014 [May 4th, 2014]
- Who is the Bitcoin Warlord? - Video - May 4th, 2014 [May 4th, 2014]