Bitcoins is a cryptocurrency which can be traded on a ledger made using blockchain technology. It was first founded by Satoshi Nakamoto .
Sudden rise in prices made people millionaires who initially traded them but it is no more profitable.
Experienced stock market trader Warren Buffet claimed that it is a bubble similar to Sub Prime Crisis of 2008. Some economists compares it with the Tulip Bubble of Europe and also the dot com bubble of 1997-2001. Bubble is something what people attracts to it, but it bursts and causes surprise disappointment to people.
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Let us discuss the reasons why you should not buy
Highly Speculative: Commodity or a thing which is highly speculative involves huge amount of risk. Easy earning ways attracts unfamiliar and immature people into this trade with minimum financial knowledge. Which is the major reason of sudden rise in the price of Bitcoin. Indirectly making Bitcoin a bubble which recently burst and fell from approximately $20000 in January 2018 to $6500 in July 2018. Just imagine the person who bought bitcoins at $19000 hoping to earn millions is losing its almost 60% of his investment.
Parallel Currency: Bitcoin is traded parallely to the currency which has legal tender of central bank and government of particular country. In the case of India, Reserve Bank Of India is responsible for printing currency with legal tender. Hence government of most of the countries is not at all interested to have parallel currency exchanged among the people. RBI announced that they are not responsible for bitcoin and in recent budget of 2018, Finance Minister announced that Bitcoins or any other cryptocurrency does not have legal tender in India. That is, it is illegal to trade in India. For few days, Amazon as well as Wallmart allowed user to pay for products using Bitcoins. In South Korea and Japan there was a high craze of mining cryptocurrency but actions were taken later. In United States, Bitcoin is traded in the commodity market. Which is the only spine of Bitcoin traders left and people who invested for the long term are facing huge loss as in last 30 days, bitcoin value is in bearish trend of -20.76.
Energy Consumption for Mining: Bitcoin uses block chain technology. Bitcoin miners mines the Bitcoin and trade through the ledger. As of now, there are 21 million bitcoins of which 72% are already in circulation. For the mining purpose, higher the configuration of graphic card and high end systems like cryptocurrency miner, more quickly the person can mine it. Most of the countries produce energy through thermal plants and if the energy consumption retained similar pace, it will lead to further increase in pollution. Reports says that if Bitcoin is a country, it will be 62nd in terms of energy consumption and further it says, energy used by Bitcoins to mine is more than total energy consumption of Denmark.
Highly Volatile: Higher the volatility, more the risk. The value of Bitcoins surpassed the GDP of New Zealand in January and its market cap is now more than other leading companies like Walmart, PepsiCo, McDonald’s, Boeing, etc. At certain point, it took the bearish trend which was difficult to predict results into huge loses.
Illegal transactions: Recently many companies all over the world including India faced the challenge of ransomware. In ransomware, company’s data gets hacked and hacker encrypts the data. To decrypt the data, hacker demands the ransom. Bitcoin was highly used for transaction to pay hackers as Bitcoins are traded on a peer-to-peer network. It is very difficult to track the user who traded as identity is not revealed. Therefore, many governments around the world are against it as it may be used for other scams, money laundering, kidnapping, pornography, etc.
People always runs for easy money without proper research and knowledge and end up losing valuable time & resources. Learn before you earn!