This cryptocurrency has become very attractive to people mainly due to the devaluation of other currencies, and many see it as an opportunity to get rich. However, you should read this post before you blindly trust it. Many people take advantage of the Bitcoin value increases to make more money, and even convert some of their business capital to avoid bankruptcies, particularly, when our national economy is experiencing a major downturn. In fact, since the election of President Trump, many people, frightened by the imminent possibility of suffering a huge economic crisis – never seen before in the history of the United States – have invested in bitcoins and this has allowed the value of this cryptocurrency to rise to the very clouds.
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However, as with any investment, the higher the yield potential, the higher the risk, and the bitcoins are no exception. Investing in bitcoins is not different than investing in other currencies such as British pounds, Canadian dollars, or euros. Essentially, the same goal is pursued here: Buying bitcoins at low prices and selling them more expensive.
However, when we talk about this digital currency, there are important considerations that you should keep in mind. The first thing to keep in mind is that it is volatile, even more so than other currencies. The price of bitcoins goes up and down, again and again, every day (and sometimes drastically.) This, of course, is walking on thin ice when it comes to investing, as well as an opportunity for moneymakers through speculation.Speculation is one of the ways to invest in bitcoins. It is made by short sales: Buying and selling currencies several times in a single day depending on the chances of the price going up or down. The second is done by developing an investment scheme in the medium or long term by buying bitcoins and wait for the value of the currency to increase, to sell it when the circumstances are more favorable (usually in the long term.)
The most common way to invest in Bitcoins is to buy the currency expecting its value to rise. If this is your case, you just need to decide for yourself if you think it’s a good time to buy. The point is, do you think the price will keep going up? Well, there is no single asset that grows ad infinitum, meaning that sooner or later it will have to reverse its trend, and that is where the great risk for investors lies. The vulnerability of Bitcoins also has to do with the fact that it does not have the backing of a central bank that helps to stabilize its price, such as legal tender currencies like yens, US dollars, or euros.
Bitcoin is approaching a price of three thousand dollars. Since January, this virtual currency has almost tripled its valuation, which is an amazing record. The rise has accelerated its ratio for two months thanks to its official acceptance as a form of payment in Japan, and it has dragged many companies and businessmen to consider it a wonderful payment option.
Nevertheless, it is important that you consider a few things before investing in Bitcoins. The first one: Last year, the Bitcoin mining firm KnCMiner has declared bankruptcy. This company designed chips that power almost all existing Bitcoin mining. In addition, they were the first to mass-produce the 28nm and 20nm chips and built industrial-scale mining infrastructures that operated with hydropower, taking advantage of the good image that leaves renewable energy as an advantage when selling its services. This is not the only scandalous case.
The case of Dogetipbot is a good example of how problematic is this. The Dogecoin tips bot has disappeared, its owner has declared bankruptcy and users have lost the money they had in their virtual wallets. The creator of Dogecoin adopted a popular social media meme to create his virtual currency, which was initially conceived as a Bitcoin satire. As an alternative to the cryptocurrency, it executed an altered variant of the Bitcoin code. The currency exploded three years ago thanks to Dogetipbot, which works similarly to how Reddit users can give among themselves Reddit Gold as if it were mere tips. Right now, although the Dogetipbot website is still active, Dogetipbot is really dead, and, in consequence, the cryptocurrency as well. At first, dogecoins were worthless, so the users spilled lots and lots of dogecoins among them because it was fun. However, the exchange rates of Bitcoin and its alternatives soon caused the dogecoins to start to be worth something. At present, a Dogecoin costs $0.002090 (0.26%.)
Mohland thought that Dogetipbot was a doable business, even though it was offered as a free service (Dogetipbot, through its website, was always advertised as a free service, indeed.) He created a company called Wow Such Business Inc. to make the service possible, but the company just had no success. Somehow, Mohland believed that his creation could support a business model, and he tried to attract investors since nobody would want to invest in a cryptocurrency that, worth the redundancy, was not monetized at all.
So, think over. Not everything that glitters is gold when it comes to the Internet.
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* Featured Image courtesy of Vitalij Fleganov at Flickr.com