When the central bank in Cyprus froze bank accounts and limited the amount of money that may be withdrawn from bank accounts it created an enormous uproar that has been felt round the world. If consumers did not have use of money how could they buy and sell the items had a need to keep on within our modern world? The reality is they can’t so consumers around the world started to consider safer alternatives to fiat currency. Fiat currency is currency that’s no tangible value besides what the government assigns to it.
Consumers are looking for a way to store their buying power to protect themselves from having bank accounts frozen for indefinite periods of time. Lots of people started trading in Bitcoins. This can be a crypto-currency which means it can not be easily counterfeited but before anyone starts buying into this new currency it would be prudent to comprehend the risks.
Bitcoins are not issued by any central bank or government so there’s no accountability whatsoever. If you’re dealing with Dollars,Euros or Pounds you have the assurance that the government behind it will honor the debt while Bitcoins do not provide any guarantees at all bitcoin instantly. The truth that nobody truly knows who made this currency so there’s no way of knowing whether maybe it’s stolen right from under our eyes.
These Bitcoins are stored in the digital wallet that may be encrypted on your computer. While this would provide a feeling of security if your computer is lost your Bitcoins are gone as well. It’s nothing like a credit card where you can get an alternative and keep on like nothing has happened.
Whilst the security with this currency is a concern definitely the largest worry is the worthiness of it. The perceived value of a Bitcoin may change in a moment and unlike fiat currencies which are backed by hard assets owned by a country if your Bitcoin value drops you have nothing of value at all.
There are certainly a few exchanges around the world that sell and buy Bitcoins, but you should not find them thinking they are going to rise in value. They are a digital commodity which some would classify as a “fad “.Tomorrow it might lose all its real value and never recover.
So to recap the risks, you may not have any real security with Bitcoins being that they are not provided by a government. The value if highly volatile and could be reduced to zero in a heart beat and the straightforward fact that the currency has only been around for some years shows it’s not proven to be reliable.
If you’re looking for a way to preserve value then precious metals like gold,silver and platinum may become more beneficial since they have been useful for centuries as a medium of exchange.
When it comes to investing you should never make rash decisions but weigh the risks and potential payoff and remember that there surely is no sure things in regards to digital currencies like Bitcoins so approach at your personal risk.