There was a gigantic leap in the value when the world is warned about the Bitcoin burst.
Due to the volatility in Bitcoin, it makes it difficult for the traders and investors to decide whether Bitcoin has a bright future or its sudden peak.
In fact, many investors are, and financial professionals are still undecided about what to do on Bitcoin themselves. Bitcoin mining code runs on blockchain to keep a record of every transaction made in virtual currency like Bitcoin.
There is no central involved, which means it is not supported by any government authority to secure your funds from frauds. Transaction made in Bitcoin is recorded in all computers available on the “blockchain network”, and the data is available publically.
Reason 1: No Government Regulation
Virtual currencies are a computerized depiction of value that isn’t given or ensured by a national bank or a public power, isn’t really attached to a legally established authority, and doesn’t have a legitimate status of money or cash, yet is acknowledged by characteristic or legal people as a method for trade and which can be moved, put away and exchanged electronically
A) Legality Issue
Bitcoin is an unauthorized currency which is not affiliated by any government or banking entity. However, Bitcoins is not declared illegal yet not recognized by any central power. Since, cryptographic currency, it can be acquired and sent to any party without being tracked by the government, which somehow increases the potentiality of illegal activities such as “money laundering”.
Bitcoins trading is not illegal, but they are not recognized by Governments at the same time. Bitcoin transactions are untraceable, which gives rise to the “illicit activities”.
B) Government Restrictions
Counties around the globe are going to handle the cryptocurrency in their own way, and Bitcoin could be affected in many ways.
In fact, the Chinese government has already imposed several restrictions on virtual currency transactions to suppress the Bitcoin. Regulations by the officials would be helpful in legitimating the cryptocurrency as well at it would underline the interest of people about it.
The major obstacle in the path of traders and investors, who are fascinated by investing in digital currency, is the uncertainty about the legality.
However, the rapid growth in bitcoin exchange is driving investor’s attention yet to the fact that the central authority did not impose banned them.
C) Unregulated Currency
Depending upon the nation, there are assortments to deal with regulating Bitcoin. The nonexistence framework for managing digital currencies just builds the vulnerability to their future. Government organizations in numerous nations are worried about utilizing Bitcoin for money laundering, tax evasion, drug dealing, and other unlawful financial exchanges.
Simultaneously, with the development of virtual currency, state structures are starting to effectively come up with different authoritative activities that somehow control the turnover of virtual currencies.
Reason 2: Extremely Risky
The innovative segment consistently grows rapidly, and regularly even uncontrollably. Financial specialists may essentially not notice the moment when their virtual asset loses their genuine value.
The issue is obvious: If worldwide brokers don’t recognize the phenomenon, retail speculators probably won’t have a very remarkable possibility either
A) Neither Commodity nor Hard Currency
The diversification in the origin of cryptocurrency seems like a bit issue for the investors. Back then, precious items like diamond, gold, silver, etc. were used by people for trading. After that, the central decide to print paper currency known fiat was regulated.
In 2009, a virtual currency appears and claimed to be mind through a complex mathematical algorithm and calling it a commodity.
Additionally, it claimed to democratic as it is not controlled and regulated by any banking or governing entity.
Therefore, cryptocurrencies don’t belong to any category, whether it is a commodity, nor currency. It is volatile and highly risky for investors, businesses, and industrial people to invest or trade in Bitcoins, as can be manipulated by absolute demand and not regulated or recognized by any government authority
B) Tremendously volatile
As the price is tremendously volatile, investing in Bitcoin involves very high risk. Due to unclear information and rumors on the market about Bitcoin, investors are doubtful about investing in virtual currency.
Therefore, investors are relying on speculations because the price of virtual currency is not regulated but mere influenced by the market demand.
In fact, with new people entering the market, the prices will climb up the tree. This might lure more investors and sooner or later, end up losing money.
C) No Customer Protection
A disagreeable fact, that Bitcoin doesn’t give any customer assurance. An ideal transaction can’t be fixed. After a failed transaction, all left is to attempt to induce the receiver of assets to restore them deliberately.
This happens as there is no guarantor in between like a bank does. Bitcoin exchanges are like traditional cash trade, in which there are just two exchangers with no guarantee.
Nevertheless, the property of the irreversibility of transaction in itself has little impact on the dangers of investing in virtual currency as an asset. Yet, the speculator should likewise know about this risk.
Reason 3: Fraud & Illegal Activity
In spite of the fact that digital currency can be utilized for unlawful action, the general effect of bitcoin and different digital currencies on illegal “money laundering” and other criminal activities is sparse with money exchanges
Similar ideas that apply to illegal money laundering utilizing fiat currency can apply to money laundering utilizing digital currencies. There are several fundamental phases of crypto-money-laundering and other illegal activities.
A) Illegal Activity
Due to the absence of the central regulation, the cryptocurrency has also been utilized by terrorists and extortionists for their personal advantage.
Since there is minimal to no information about the dealing parties, criminals can remain anonymous on either end of the transaction to address their illegal activities. Thus it is so difficult for the central authority to hunt down these illegal activities.
So, this kind of people to people encrypted, non-regulated virtual currency may easily be used in illegal activities like money laundering, etc.
B) Virtual Fraud
Fraud is at the peak associated with exchanging and transactions made through cryptocurrency. The fraudster is taking advantage of misinformation around the web to do fraud by offering varied schemes that promise guaranteed high profitability.
Luring investors into these fraudulent schemes it quite easy with unclear and misinformation in the virtual industry.
C) Theft is a step away
Theft is another threat stirring in the virtual industry, simply by gaining the access of a secret key, a thief can easily steal the entire virtual currency from the digital wallet.
In fact, there are scenarios when by mistake or due to an unfortunate incident, the investor lost his secret key, and that means no more access to the digital wallet.
To minimize these obstacles, one should gain knowledge, hire a blockchain developer and then invest in a cryptocurrency.
Investing assets into Bitcoin today is an extremely hazardous venture. There is no surety of least benefit at any rate or earn back the investment.
All financial specialists who will work with cryptographic money today should comprehend about the digital currency. Moreover, an unpracticed financial investor ought to throw the sums that he is prepared to lose.