Wed. Sep 30th, 2020

Planet Compliance

Innovation & Regulation in Finance

Bitcoin Investment Returns Are They Worth It?

5 min read

Are you planning to invest in bitcoin? It’s always good to ask yourself questions before putting your money in any financial product expecting to get returns. For instance, can you liquidate holdings in crisis times? Is the capital used plus returns securely? Can the investment make money? Finding answers to these questions is very crucial to avoid regrets in the end. It’d only be best if your answer is a strong yes. But, what about investing in virtual currencies such as bitcoin and ethereum? Can it work properly? Are you assured of your money’s security? Well, this article tackles investing in bitcoin. Let’s find out if it’s worth it or not.

Are bitcoin returns worth it?

A majority of individuals have been attracted to surging bitcoin rates between 2013 and 2019. The high returns have leveraged most investors, making them easily shift to investing in cryptocurrencies. However, does that give adequate reasons to make you put your money in it? Maybe it’s an amount borrowed after learning the basics about investments in bitcoins from A1 Credit. Don’t you think the unrealistic returns gotten are just too good to last? Think about the volatility of most digital currencies. Additionally, we’ve got other reasons why investing in cryptos isn’t a good idea. Let’s look at the following explanations to help you understand before gauging its worth. They include;

Remittance problem

While most information concerning bitcoins could mislead by stating that many are adopting the system, the truth is they do it out of speculation. Not many of them want it to make transactions. Some bank and finance service heads have warned against it, saying that similar to how other financial institutions use Visa cards and MasterCard, bitcoin should be mainstream. Some countries warn their citizens against getting involved with any cryptocurrencies. They advise that it should be given time for more to be revealed- an example is India.

More other arguments can be seen from history where bitcoins rates can double up in a few days or hours. Consequently, its volatility makes it unrealistic to implement bitcoin use. Transacting also takes more time, thus making it unreliable. Sometimes it may take very many hours before a transaction is deemed valid. Be advised that its volatility in nature can readily impact remittance losses. You again have to convert the bitcoins into cash or regular currency before trading with it.

The idea is speculative

For any investment put in a company, it’s clear that your returns depend on its earnings, turnover, growth, internal or external factors, and of course, growth. The same thing applies to every financial good you invest in, and there must be b away the money input should grow. Nevertheless, it’s not the same tale with digital currencies. Bitcoin, for example, relies solely on people’s demands to give the rates. It’s mainly guided by speculation.

The advice given by the chief officer of Fintech is that bitcoin is a peer-to-peer money network with a mere 21 million total bitcoins, out of which, over 18 million, is in supply. It may look enticing only because of the high demand with limited supply and decentralization. A lot of speculation is what is driving it. How can you imagine its returns are worth it with such kind of uncertainty?

A reduced price risks losing money

In most scenarios, capital market funds are taken care of by a specific security agency or any other agency. But bitcoin doesn’t have such. That means in case you get conned or undergo fraudulence during bitcoin exchange. Then you might end up losing your cash. You have no one to intervene. Not even the government can come in between as a saviour. Selling and buying digital money at its face value is ok. However, without a regulator and you get a fraud, you’ll have to accept and move on- no one to blame. Bitcoin’s authentic validation is also challenging due to the lack of a mechanism to do that. More negativity is in the times when some investors are challenged during bitcoin selling. Why is it crucial if it’s critical to liquidate?

Ponzi schemes involvement

Having a high interest in bitcoin can lure you to traps in mining services or other investments, encouraging positive returns. Don’t forget what we said earlier about bitcoins. They’re volatile, hence can’t have fixed returns. If anyone mentions it to you, know it’s a scam. Bitcoin’s working mechanism has less trust and is unknown. Therefore, some people might misuse it. If you’ve got the potential to invest, you should be familiar with all the risks involved. Avoid exposing your codes and private keys. Don’t even risk clicking any links linked to phishing in the past.

What if bitcoins get banned?

Currently, there’s too much ambiguity in digital monetary systems’ legality. We can’t say if it’s legalized or not yet. What if the government decides to ban all cryptocurrencies? Your money will be lost if bitcoin ceases to operate. The reason is you don’t have a regulator to intervene and get your cashback. Unless the ban is only affecting a particular region because a better option to save the money is exchanging the bitcoins into any other fiat currency- not your country’s.

The Bottom Line

Digital monetary networks have turned common people into billionaires, more so through bitcoin. Seemingly, the trend may continue for longer. Remember the questions you should ask before investing in a product and expecting returns. Does the same apply to bitcoins? Don’t neglect what people warn against the deals that always seem too good to be true. There are high chances of looming trouble.

The fact that the system isn’t operated or regulated by a body or individual, for how long will that trust in transacting money serve you faithfully? Your money isn’t safe; therefore, no need for taking risks. Bitcoins greatly suffer liquidity when prices crack. If this happens and your assets burst, the result is worse, especially to smaller investors- because they’re hurt the best. Moreover, you can’t use bitcoins for buying goods in exchange for the market. What you need is converting it to the common currency before use. There are more other risks in adopting the bitcoin system that makes its returns not worth it.

 

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

PlanetCompliance © 2020. All rights reserved. | Newsphere by AF themes.