It is only around 2017 that the knowledge of Cryptocurrencies reached far and wide with Bitcoin reaching its highest value. Before that, people who were aware of it, did not pay much heed to it. It was often discarded as a scam. In 2011, when Bitcoin, the first Cryptocurrency was introduced in the market by an anonymous Satoshi Nakamoto, people had their reservations. Barely anyone wanted to trust Bitcoin with their money.
Eventually, many other Cryptocurrencies emerged in the market. New investors were attracted to this market. If you want to join the bandwagon too, bitcoin wallet might just interest you. However, there always remain certain risks associated with it. Let us delve deep into the reasons why investing in Cryptocurrencies can be a bad decision.
- Intangible and Unauthorized
Why it took a lot of time for Bitcoin to gain confidence among investors is the simple reason that it is intangible. Though we can say the same for digital money, we can at least be sure of its value. Unlike Cryptocurrencies, fiat money has a fixed value attached to it. Even for shares and bonds, there is a company working as the guarantor for the money people have invested in it.
On top of its intangible nature is the added disadvantage that it is not authorized by the central governing power. People find it difficult to invest their money and trust into it.
- Lack of stabilizing force
The lack of Governmental support behind Cryptocurrencies leaves them in a vulnerable state. The value fluctuates based on the opinion of famous personalities who have the ability to influence the mass. The value of Cryptocurrencies fluctuates to such an extent that while it is on the rise, people are willing to accept it as a form of currency. Investors would instead want to hoard their Cryptocurrencies. However, they are also wary of the fact that there may not be a market available anymore when the value of the Cryptocurrencies goes down. This makes Cryptocurrencies an unstable investing option.
- It is a contender of the national currencies
Cryptocurrency emerged in the market as an alternative to national currencies. The aim was to eradicate income disparity. Even though the disparity still remains, Cryptocurrencies have really made a mark in the market. This mark however, seems transient. The fact that Cryptocurrencies are competing against the national currencies, outside the purview of the Government, makes them a vulnerable option to invest in. Cryptocurrencies are always under the threat of being banned in other countries.
China has already eliminated its influence in the country. Several other countries are supposed to be on their way to doing it. The Governments would rather replicate the idea and technology and create their own Cryptocurrencies, under the aegis and banner of the government. Such a decentralized form of currency also poses a threat to the stability of the central government, if more people started opting for it.
- Investing in Cryptocurrency is not the same as investing in Blockchain Technology
Some people are so in awe of the Blockchain Technology and its revolutionary benefits, that they believe they are contributing to the growth of the technology by investing in Bitcoin and other such Cryptocurrencies. Once they start realizing that, there will be many withdrawals. However, the faith in Cryptocurrencies is yet to settle in.
The value of Cryptocurrencies fluctuates based on the number of investors. The number of investors follows a steep graph due to the series of speculation that floats around the Crypto market. The uncertainty attached to the value of the Cryptocurrency makes it so difficult to keep faith in its intangibility.