There are a lot of risks involved with investing in crypto-currency because their price has become extremely volatile. It is funny how financial experts have nothing to say about using bitcoins as a primary investment because they have nothing to analyze. This is because there is not enough of an ecosystem surrounding bitcoins. Therefore, people are joining the bitcoin community without proper information about the trend and the future of this currency. Furthermore, the prices of bitcoins are not regulated, and this makes it even riskier for investment. Many people join the community because its high value lures them and this makes the currency even more valuable. This bubble might eventually burst to cause widespread losses.
It’s neither a currency nor a commodity
One of the biggest mystery surrounding crypto-currency is the fact that it is not defined. Therefore, it is not a currency, and neither is it a commodity. Some arguments suggest that they are supposed to be a commodity because they are mined by cracking some complex algorithms. Despite this, they are reluctant to call it a commodity and instead look at it as a currency. Moreover, what makes it even hard is the fact that its price is not regulated by any institution including the government. Because of their nature, they are very risky to invest.
Possibility of fraud
Crypto-currency can be a form of cheating aside from the operational issues of trading. Considering that there is lack of clarity and a lot of misinformation about this form of currency, there is a possibility that it might be a long-term calculated fraud. Moreover, the use of bitcoins provides a favorable environment for fraudsters such as the Ponzi scheme which promises to pay in Bitcoins.
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Therefore, it is highly recommended to avoid investing in bitcoins. However, if you are a risk taker and you have to try using this currency, then, avoid investing all your finances just in case things don’t go your way.
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