Tim Draper, Sam Bankman, Brian Armstrong, if you recognize these names, you are a bitcoin enthusiast. These individuals are bitcoin-made billionaires. Riding the volatile cradle of bitcoin, many investors, such as them, have gained a fortune.
There is no doubt that cryptocurrency is a booming industry now. The recent trends are seeing bitcoins as a profitable investment idea, following which countless other cryptocurrencies are also taking the frontline.
But there are specific reasons that may change your mind if you are willing to buy bitcoin. This article will provide you with five reasons stating that bitcoin is a terrible investment in 2022.
Bitcoin Is A Terrible Investment
Even though you may know bitcoin as a wealth-generating investment idea, investors often overlook severe problems with bitcoin.
These problems will someday cause a massive bubble bursting effect, making thousands of investors regret their decisions. Here are some of those reasons-
Highly Volatile
Bitcoin is a decentralized peer-to-peer payment method, and it is highly volatile. The volatility is not an isolated one. The ups and downs of bitcoins values determine the values of other cryptocurrencies.
The price fluctuation of bitcoin deeply affects the cryptocurrency market. There are specific reasons behind this occasional fluctuation in its value. Such factors are-
- Investment attractiveness.
- Demand and supply.
- Government policies.
- Users’ adaptability to new updates.
These reasons may cause the value of bitcoin to either rise or fall miserably. The volatility is the reason bitcoin lovers are prone to invest in it. Unfortunately, the same reason may cause the downfall of bitcoin, making the price go down.
There is no telling when bitcoin’s value may kiss the dust; investors need to be careful about such imminent danger.
Made Up Value
The value of bitcoin is a made-up one. If we compare it with regular fiat money, we can see the difference. The fiat money has the government’s guarantee that backs it up because the government is the one first to issue it. Hence it is valuable.
There may be some opposite opinions saying that fiat money also has no value since it is not made of valuable objects such as gold. However, this idea is foolish since the value of the fiat money is already decided by the government, and the government actively backs up its credibility.
But the value of bitcoin is simply a made-up one. The value exists because some people are willing to buy it. The fiat money has value because the government can tax its citizens, sell bonds, and sell assets to back up the currency.
The Crisis Is Artificial
Bitcoin price is going upwards because the number of bitcoins is limited. But is it true? Bitcoins are limited in numbers because the miners of bitcoin chose to make it so.
The physical objects obtaining value such as gold, metals, and other minable objects are limited to the store underground. But the scarcity of bitcoin is due to the choice of programmers not to produce more.
The computational puzzle that bitcoin mining requires solving needs high-powered computers. The process is very energy-intensive and time-consuming. This is partly the reason why bitcoin mining is limited to certain numbers.
Competing With National Currencies
The bitcoin supporters are buzzing, saying that bitcoin will replace fiat money someday. Let’s believe that it has some possibility shortly. But it also means that bitcoin is on par with national currencies.
It is unimaginable to even think about the central banks of different nationalities adopting bitcoin in place of their national currencies.
Different countries have different laws and policies. It is impossible to negate their national system and adopt any currency that appears to appeal to a certain group of people.
Adopting bitcoin in place of the national currency would tremendously hurt the monetary systems of different nations across the world. For example, China has banned bitcoin; several other countries don’t see it as a legal payment or currency.
Several countries are already developing their cryptocurrencies based on a centralized blockchain. Some companies are creating their cryptocurrencies with some assets to back them up. These currencies offer more reliability than bitcoin.
The Value Is In the Blockchain
The real value of bitcoin or any other cryptocurrency does not lie in its tokens; the real value resides in the blockchain technology it uses.
The blockchain technology of Ethereum offers the creation of smart contracts and other dApps/ decentralized applications that have an array of applications in real life.
The real asset of cryptocurrencies is blockchain technology. The tokens only act to bear transactions from one person to another.
Final Words
The recent past for bitcoin investors has been something like an unprecedented achievement. The value has significantly gone high, making some of the investor’s billionaires. Many investors are also using “crypto arbitrage vip” to double their bitcoin legitimately
But the future doesn’t promise such things for the new investors. So there is no merit in investing in something that does not promise any stability.
Author bio:
Ani Johnson is a passionate blogger. She loves to share her thoughts, ideas, and experiences with the world through blogging. Ani Johnson is associated with Gossipment, TheParentsmagazine, ThePetsMagazine, TheLegalGuides, EssayWritingGuides, TheSportsMag.