Coronavirus has devastated both the traditional markets as well as the cryptocurrency markets. As such, there is mammoth confusion everywhere; investors are keeping their hands down and taking time out to monitor the markets before spending any penny. Amidst such confusion, it is very difficult to analyze whether investing in Bitcoins or other cryptocurrencies will be safer or not. In fact, in order to come up with any kind of conclusion regarding cryptocurrencies, understanding the following things is of prime importance. Let’s go ahead.
Things we should know before investing in Bitcoin
Bitcoin being a digital currency, has always been a topic that attracts massive skepticisms. Here is what you should know about Bitcoin before investing it.
Bitcoin is highly volatile
Bitcoin is highly unstable and unpredictable as such, its price may fluctuate every now and then; therefore, there are massive investment risks associated with Bitcoin. So, it is advisable to put resources into the measure of the cash up to the limit that you can afford to lose, to balance the misfortunes later on. It is, therefore, very important to do your own research before investing and trading with bitcoins. You can log on to forza-trading.com to get a comprehensive guide on bitcoin trading along with its nooks and corners.
Bitcoin is pseudonymous
This means that to initiate any bitcoin transactions, you don’t need to reveal any personal information, yet every transaction is recorded in the blockchain.
Bitcoin is decentralized
Bitcoin transactions are decentralized, meaning that there is no central authority like banks backing them. The owner has the sole authority to use it anywhere they like, but then there is a disadvantage that this lack of government interference often leads to criminal activities beyond anyone’s control.
Bitcoin has limited options
The lack of market liquidity and the concern for the investors’ safety have put the bitcoin investors at limited options. Bitcoin investors can either buy bitcoin directly from a crypto exchange or from a broker or can buy bitcoin from other sources like crypto ATMs.
Benefits of bitcoin
Here are some of the benefits of using Bitcoins.
Potential gain is more than potential loss
If Bitcoin secures the status of a legal tender in both the domestic and international trade, then the potential gain in using bitcoins would be much higher than the potential losses.
Bitcoin transactions are irreversible
Once money goes to the seller’s account, it cannot be traced back to the buyer by any means whatsoever. This also calls for more cautiousness before sending funds.
Cheaper and easier transactions
Besides offering a faster mode of transaction, bitcoin transactions are also relatively cheaper than other modes of payment due to the low transaction fees. No extra transaction fees are required in order to make or receive international payments.
Is it OK to buy bitcoin in these times of global crisis?
Following the coronavirus aftermath, Bitcoin lovers are compelled to believe that it is no more a “safe haven” as it was called earlier. In fact, this latest economic downturn has exposed Bitcoin to be just another financial asset. Even the 10-year-old Bitcoin was crashed down after WHO declared Coronavirus to be Pandemic, with price devaluating drastically just as the stock market crashed.
But in countries with high inflation, though the price of bitcoin crashed alongside the stock market, at least it did well as compared to their national currencies. This is because unlike other financial assets like gold, bitcoin does not depend on the cash flows of other institutions for the value. Bitcoin, in fact, lost half of its value in just two days’ plunge. Therefore, in this hour of global crisis, it is not safe to buy bitcoins, as till now, this cryptocurrency has not secured an ‘exchange status,’ and therefore, it cannot be exchanged to buy essentials like food, clothing, etc.
Bitcoin Trading Service, being adopted by Italians
Leading Italian bank, Banca Sella, launched a Bitcoin trading service platform catering to the service of around 1.2 million Italians who are already using Banca Sella’s platform named ‘Hype,’ to carry out transactions. The bank, Banca Sella, will serve as an intermediary to mitigate the potential security risks that may come up in the way of the crypto exchanges. The Hype users can buy and sell Bitcoin, and can also pay for essential products and using crypto.
Coronavirus has thus made cash essential in this hour of crisis, with cryptocurrencies even like the most widespread bitcoin, not even to provide any robust solution.