There are millions of people across the world, who believe digital currency is the future of finance. Digital currencies like Bitcoins have generated the biggest buzz in the traditional finance and currency world in the last one hundred years.
There are several advantages of using digital-based cryptocurrencies-
- Digital currencies are much faster as compared to traditional financial currencies.
- They are more secure as they only function via Blockchain technology.
- There is no government interference or financial body regulations.
- The valuation of the currency does not drop when it is being used inter-country or inter-continent.
- Payment fees are cut down to a minimum, as the transaction does not take into consideration a third party vendor. This also translates into lesser business and overhead costs.
In short, the proponents of cryptocurrencies are quick to point out the several advantages of using them. However, this does not mean that Bitcoins or other digital currencies are not free from risk factors.
Top 5 Risks Associated with Bitcoins: The List
Not completely recognized by all Governments and Financial Institutions:
Even though Bitcoin’s popularity is soaring in countries in North America and Western Europe, other countries are not too excited about ushering in the cryptocurrency revolution. They fear the kind of impact it will have on their economies.
China, India, and Russia are three of the biggest economies in the world. All three of them severely restrict the use, sale, purchase and exchange of Bitcoins and other digital currencies. This somewhat defeats the purpose of Bitcoins aiming to have a pan-global system of operation.
The Regulatory Risks of Digital Currencies:
It would be foolish to assume that Bitcoins are not a threat to century-old traditional finance markets. As such, Bitcoins along with other digital currencies are subject to strict regulations, even in countries in which they are allowed to operate.
Governments frequently accuse Bitcoin usage as being done by anti-social elements, including terrorists to purchase arms, drugs and indulge in human trafficking. Most government bodies try to maintain stringent records of Bitcoin transactions and identify people and groups making these transactions.
Hacking, Malware, and Security Risks:
Anything that is stored on a digital computer, is suspect to be infiltrated by expert hackers, malware specialists and the corrupt. In 2014, hackers managed to steal millions of dollars’ worth of Bitcoins from Mt. Gox, a Bitcoin Exchange in Japan.
There is no chance that you can claim your Bitcoin back, once it has been stolen. This would require the person who owns it now to give it back to you. Most people make the mistake of storing their Bitcoin Exchange ID on a computer connected to the internet.
Bitcoin is not covered by Insurance:
Even though Bitcoin identifies or aligns with over ninety percent of a currency’s definition, firms and banks still cannot insure it. Even though Bitcoin was founded a decade ago, no mainstream bank or financial firm has come forward and brought about a Bitcoin Insurance Scheme of Program.
Market Volatility:
Most people do not understand that the number of people directly engaged with Bitcoin is directly proportional to its valuation. As that number drops, Bitcoin’s importance and valuation start dropping too.
From a stratospheric rise of over $20000 USD in December 2017 to a mercurial low of less than $1000 USD within months, Bitcoin has seen the best of both worlds in a short span of time. The digital currency is volatile and grossly fluctuates.
Conclusion
Even though there are several risks associated with Bitcoins, it would not be fair to say that they are associated with traditional finance and currency as well. In the last few years, specialized Bitcoin Trading Platforms have come up, which are helping normal people invest and earn handsomely from Bitcoin trading.
They also help people mitigate the risks of Bitcoin trading. Bitcoin Profit App is one such platform that is helping individuals earn over $1000 USD every month from sound financial advice on Bitcoins. You can login Bitcoin profit here: Bitcoin Profit new version Login
