There are lots of people out there practically kicking themselves because they did not see the potential of Bitcoin many years ago when it was a fairly new and obscure form of currency. They know that, had they invested back then, they could potentially be very rich right now. Perhaps you’re one of them; if you are and you’re thinking about rectifying your mistake and investing in Bitcoin right now, no one could blame you, especially after the recent spike in value. However, it would be very prudent of you to think of the risks first.
With that in mind, here are some of the riskier aspects of investing in Bitcoin and other cryptocurrencies that you should probably know before you go plowing your life savings into them:
Investing your financial resources in Bitcoin is in no way a guaranteed way to huge returns. On the contrary, when you invest in Bitcoin, it’s a bit like buying a lottery ticket and hoping for the best or investing in a brand new entrepreneur with no track record and hoping that it will pay off. Bitcoin can soar and fall dramatically in any given our, let alone any given day, which means although you can reap huge rewards, you could also lose everything, so unless you’re willing to bankrupt yourself, only invest what you can afford to lose in cryptocurrencies.
The Future of Bitcoin is Uncertain
Because Bitcoin is a currency, rather than a business, it does not have any cash flow data or financial reports that you can read, or have your financial adviser look over, before you take the plunge and invest. This means that it is much riskier to invest in Bitcoin than it is traditional stocks and shares. Of course, even when a company looks good on paper, your stocks can plummet, but it’s a lot less likely, and most people in Wall Street are very wary of the future of Bitcoin, so you really do need to proceed with caution.
Better Places to Put Your Money Exist
There are so many better places to invest your money than in Bitcoin. Read more at https://commodity.com/brokers/ to find out about the benefits of commodities, check out the benefit of plowing your cash into your 401(k) to benefit from employee matching or even have a financial advisor talk you through the stock market and you will see that they are all safer than Bitcoin. Of course, you might not want to play it safe and you might want to risk it all for the potentially huge rewards, but you should at least do your due diligence first.
The Bottom Line: Unless you have an infinite pool of money to invest and unless you’re willing to get very risky in the financial department, you probably shouldn’t put all of your eggs in the Bitcoin basket. Of course, if you feel you would like to invest in that direction, there’s nothing wrong with having some of your cash there, but the more diversified your portfolio is, the safer your money is likely to be.