The three crucial questions you must be asking while investing in a financial product are: “Is my investment safe; is it liquefiable during a crisis; and can I make any money out of it?” Only when the answers to these three questions are ‘Yes”, then you must really invest in the said product. This idea goes too far to emphasize that the unrealistic returns alone cannot be a factor that justifies your investment in a cryptocurrency like Bitcoin. Here are the top reasons why you must not be swayed by the bitcoin frenzy.
The growth is only speculative
While buying stocks, the growth of the investment is proportional to the growth of the company. There is a particular mechanism that accounts for the growth of every investment product you can think of. However, the only factors that decide the price of bitcoins are demand and supply. Speculation alone drives its growth as of now.
You can’t use bitcoin to buy anything
If you want to buy anything with bitcoins, you must first convert it into currency. Due to the price volatility of the bitcoins, remittances cannot be implemented on them. Further, since the bitcoins domain is not regulated, there is a huge risk involved in investing in them.
You lost your money when the exchange goes down
There are some boards and bodies to regulate the capital markets and mutual funds. However, there is no such watchdog taking care of bitcoins. Hence if you become a victim of a frPonzient bitcoin exchange, none can help you get back your money.
Ponzy schemes in the bitcoins domain
While investing in bitcoins, you might fall prey to some Ponzy schemes that throw false promises regarding fixed returns. Know that due to the extremely volatile nature of the bitcoins, there can never be such a thing as fixed returns in the bitcoins domain.