When the Central Bank of Cyprus closed its bank accounts and limited the amount of money that could be withdrawn from bank accounts, it caused a huge resonance all over the world. If consumers did not have access to money, how could they buy and sell the things needed to move forward in our modern world? In fact, they can’t do that, so consumers around the world have started looking for safer alternatives to paper money. A fiat currency is a currency that has no material value other than the one attributed to it by the Government.
Consumers are looking for a way to maintain their purchasing power to protect themselves from blocking their bank accounts indefinitely. Many people started trading bitcoins. This is a cryptocurrency, which means that it is not easy to fake, but before anyone starts buying this new currency, it is advisable to understand the risks associated with it.
Bitcoin is not issued by the central bank or the government, so there is no responsibility. When you are dealing with dollars, euros or pounds, you can be sure that the government behind it will pay off the debt, while bitcoins do not give any guarantees. The fact is that no one really knows who created this currency, so it is impossible to know whether it can be stolen before our eyes.
These bitcoins are stored in a digital wallet that can be encrypted on your computer. While this should provide a sense of security in the event of losing your computer, your bitcoins will also disappear. It’s not like a credit card where you can get a replacement card and just go on and on.
While the security of this currency is of serious concern, its value is a cause for concern. The perceived value of Bitcoin can change in the blink of an eye, and unlike paper currencies secured by physical land assets, if the value of Bitcoin falls, you will have nothing at all.
There are several exchanges in the world that sell and buy bitcoins, but you don’t have to buy them expecting them to rise in value. It’s a digital product that some call “fashion.” Tomorrow he may lose all his true value and never recover.
So to summarize the risks, you have no real security with bitcoins because they are not provided by any government. The cost is very unstable and can be reduced to zero in an instant, and the fact that the currency exists only a few years, shows that its reliability is not proven.
If you are looking for a way to maintain value, precious metals such as gold, silver and platinum may be more profitable as they have been used for centuries as a means of exchange.
When it comes to investing, you should never make hasty decisions, but weigh risks and potential payouts and remember that there is no certainty when it comes to digital currencies such as bitcoins, so approach them at your own risk.