Get To Know The Basics of Bitcoin: Some Drawbacks of Bitcoin

Digital coins are becoming more and more popular every day. This is mainly attributed to the fact that cryptocurrency such as bitcoin has various additional features compared to physical currency or our current digital payment system. It is decentralised, meaning no government or any other authority control it, but then the question arises how is it a secure method of transactions then?

The answer lies in the blockchain technology that bitcoins are based on. Every time a transaction is done using bitcoin, such transactions get stored on all the computers in the network, so no one or two computers store the data. Hence, it becomes impossible to erase, alter, or even hack this data.

This makes bitcoin transparent. Another essential feature of Bitcoin is that the transactions made using Bitcoin are much faster than other forms of online transactions. There is also a very nominal fee involved.

Now, people have primarily invested in bitcoin because this currency has given back the maximum profits. Many celebrities, such as Mike Tyson, Elon Musk, etc., have invested in bitcoin and now hold several Bitcoins while many prefer trading. You can always check out yuan pay group If you are a beginner in cryptocurrency and does not know whether to invest in bitcoin or not, then start with a small amount.

Bitcoin today is high priced, and of course, not everybody has this crazy amount of money to invest; therefore, investing a small amount and owning a small fraction of this bitcoin is a good decision. You will not be a millionaire if the price of bitcoin rises, but you will indeed have more profits than any bank or another type of investment can give back.

If you go and check out the price of Bitcoin right now, it is running at $47,670. Now the question arises why bitcoin is priced so high? There are mainly two reasons behind this. Firstly, unlike our currency system, Bitcoins are limited in supply.

There can only exist 21 million bitcoin at any point in time, no more. So, it is limited in supply, and as the demand for this digital asset rises, the prices soar high. Secondly, The price also continues to rise due to speculation that the price of bitcoin will rise in the future because of its limited supply.

Previous years have also shown a significant rise in the prices, and therefore people are ready to invest whatever they can to own a fraction of bitcoin.

Some Drawbacks of Bitcoin

Now that you have read all that bitcoin has to offer. However, it is also important to throw some light upon its drawbacks.

  • Bitcoins have not yet become the mode of transaction at all places. It is still a work in progress and has several years to go before it is accepted globally, and that too there is no surety behind it becoming a worldwide mode of transaction.
  • Another major drawback is that, like stocks, bitcoin is highly volatile. If the market crashes, then the price can touch the bottom. Therefore there is a significant risk involved with these coins.
  • It is not a physical currency. Instead, it is a digital asset, and therefore it is internet-based. Therefore, if there is no internet anytime, transactions using bitcoin will not be possible. Moreover, if a computer breakdown down the network or any other kind of error occurs, the money involved can be lost. After all, it is only a virtual currency.
  • Every bitcoin holder has a private key that is the only link between you and your bitcoin, and therefore if this private key is lost, that means saying goodbye to your bitcoins.
  • There are so many more cryptocurrencies today that possess thousands of unique features, so there is always a chance of some better digital currency replacing Bitcoin. Therefore there is doubt regarding its long continuation. Moreover, the government can permanently ban cryptocurrency.

So before moving forward with your investment in Bitcoin, it is advisable to do your research and proceed.

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