According to many experts, Bitcoin was and still is doomed to fail, though so far, it didn’t happen. According to its most ardent enthusiasts, it will not only become a fiat currency but rather it will replace all other currencies altogether. Is it possible? In a second, you’ll learn what you should remember about before you invest all your savings in Bitcoin. Let’s go!
What caused Bitcoin to be so popular?
There are several factors that made it surprisingly popular cryptocurrency all around the globe:
Although initially, the internet used to be a channel that allowed for free communication, soon, the online activity of the users started being tracked by the governments. It meant that the users who purchased illegal products or services on the internet could end up in jail.
If you live in a democratic country, you could be contacted by the police if you order drugs without using any tools to mask your online activity. On the other hand, if you are living under an authoritarian regime, you could be jailed for literally anything. To make it almost impossible for any government agencies to track online transactions, people started using TOR and VPNs. For some people, Bitcoins are just another way to make online orders untraceable.
Mistrust and banks
After the financial crisis of 2007-08, many started doubting whether they can rely on the banking system that is currently in place. Sure, bankers were always considered to be somewhat shady, but the financial crisis made many people aware that the supposedly serious institutions care primarily about their own gain. Subsequently, more and more people started looking for another way. The idea of cryptocurrency is nothing new, though, among all cryptocurrencies, Bitcoin is the most popular and safest option. It’s far from ideal, but many people don’t mind sacrificing some of the security of traditional banking channels just to eliminate a middleman.
Okay, but if everything were so perfect, then everyone would be investing in Bitcoin. What are the issues that the users are facing that still need to be resolved?
A limited number of places accepts Bitcoins
Although there are shops, and even banks that accept Bitcoins, their number is still limited. Even if you manage to either buy or mine a significant number of Bitcoins, you’ll only have a certain amount of places where you could spend them. Some of the companies that accept Bitcoin payments are AT&T, BitCasino, or Twitch. For some time, even KFC in Canada accepted Bitcoins. It means that you could buy food, pay your bills, or even gamble using Bitcoins, though if you mine enough Bitcoins, you might find it difficult to find places where you could spend them.
Even though Bitcoin is one of the most stable cryptocurrencies in the world, it doesn’t mean that it can be compared to any fiat currencies. Sure, you could find several real-world currencies, like those in Zimbabwe or Venezuela, that are even less stable, but it doesn’t mean that Bitcoin could be currently considered stable. A 10% swing in the value of Bitcoin is nothing unusual. On a real stock market, a 10% swing just doesn’t happen – a 1% swing is something that can only sometimes be observed.
It means that you can earn money with Bitcoin, sure, but the unpredictability of the market makes it close to impossible to predict what could happen in the near future. It makes any investments risky, as the price of Bitcoin could suddenly fall drastically.
Another issue that the Bitcoin traders and miners are facing is inadequate security. You often hear about hackers that rob people out of their hard-mined Bitcoins, and though the security is getting better and better, you should still exercise caution. If you want to make it more challenging for hackers to take your wealth, you could start using “digital wallets” – your Bitcoins would be stored there, instead directly on your computer. Still, if there is to be any chance of Bitcoin becoming a fiat currency anytime in the future, serious measures should be undertaken to increase the security for its users.
Is it a good idea?
Should you be wary of investing in Bitcoins? It depends. If you think that you can earn a lot of money quickly, then sorry to disappoint you, but your chances of success are slim. Bitcoin is still quite volatile, which means that you could quickly lose a fortune. Is it bound to happen? Not necessarily, but if you want to avoid such a high risk, then the stock market is a better choice, as it is much more stable. If you haven’t hopped on the Bitcoin bandwagon just because you want to get rich quickly, but instead, you want to buy products and services anonymously on the internet, then Bitcoin is a viable option.