What are the risks with Bitcoin ?
Bitcoins over the last one year have given phenomenal returns. Infact the value of a bitcoin has increased from Rs40,000(Oct 2016) to Rs 4,70,000 (Oct 2017) in just over a year.
Yes, you would have increased your wealth by almost twelve times in a year had you invested your money in bitcoins! This do come with certain risks which are mentioned below.
Price Unstability: Currently Bitcoin prices are going up like crazy. There have been instances in the past when bitcoin prices have came crashing down in a matter of few days. So there are chances that you might end up losing a lot of money.
Hackable: There have been many instances where people have lost bitcoins or had their bitcoins stolen. If you lose Bitcoins you lose them forever. You can never recover stolen or lost bitcoins. The best way to store your Bitcoins is on a disk that is disconnected from the internet.
Not Widely Acceptable: In India, there are hardly any places where Bitcoins are accepted as payment. This means that people buying bitcoins are purely buying it for speculative investment purposes.
Illegal Usage: Bitcoins don’t reveal the identity of the buyer/seller. This feature is often misused by criminals/terrorists in buying and selling drugs, illegal weapons etc with significantly less risk of being traced by authorities.
Government Regulation: Since Bitcoins are not backed by Indian government, they may decide owning Bitcoin illegal or shut down bitcoin exchanges. This means that all your invested wealth in bitcoin may become futile.
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