13 Nov The Bitcoin Debate
Many investors are confronted with the Bitcoin phenomena every day. Questions like
“What is Bitcoin … How does it work … Should I buy it” I am by no means an expert on
Bitcoin, although I bought two Bitcoins 5 years ago for speculation purposes. Bitcoin
first started trading in January 2009. The value of a Bitcoin never went above $0.39 in
the first two years. On November 8 2017, Bitcoin was trading at $7,899 but by November
12, it had fallen back to $5,450. The trading volumes by end of October, 2017 was $8 billion.
This is quite an astonishing performance.
The question right now though is should one invest in Bitcoin? To answer this question I
have put together some of the advantages and disadvantages of owning Bitcoins from
an article by Michael Lewis
Protection from Fraud
As Bitcoin is a digital currency it cannot be counterfeited or reversed by the sender as with
credit card charge-backs.
Less risk of Identity Theft
Bitcoins only need a digital wallet ID to transact. No names or ID numbers are needed.
Bitcoin transactions can be settled much quicker than normal banking transactions.
Connecting to Inaccessible Markets
Many people across the world who do not have traditional bank accounts can use Bitcoin
Low Transaction Fees
Traditionally Bitcoin fees have been lower than conventional financial institution fees.
Illegal and Immoral Financing
Virtual currencies are been used for illegal and immoral transactions like identity theft
and payment to dark sites like Silk Road. It is just a matter of time till governments all
over the world will clamp down on the cryptocurrencies. The most important reason
however, is that they are losing revenue from trade and money laundering.
Lack of Security
In a recent article by Wired it is estimated that out of the 40 odd virtual currency exchanges,
18 have gone out of business with only 6 of those reimbursing their customers. Recently
Bitcoin wallets to the value of $300 million got whiped out overnight.
The virtual currency has shown great potential in the last 3 years. More and more investors
are turning anti- government and anti- financial institutions. I have no problem with
Speculating with virtual currencies, but as a serious investment I would not recommend it
due to the volatility and huge potential for cyber criminality.
I still believe physical #preciousmetalbars is the way to go as huge gains will be realized once
the financial markets finally crack.