When the central bank bank accounts of Cyprus Geze and limited the amount of money that can be removed from bank accounts, it has created a huge felt tumult all over the world. If consumers did not have access to money how could they buy and sell the things needed to continue in our modern world? The reality is that they can not if consumers around the world have started looking for safer alternatives to the Fiat currency. Fiat Currency is the currency that has no tangible value outside what the government attributes it.
Consumers are looking for a way to store their purchasing power to protect yourself from frozen bank accounts for indeterminate periods. Many people have started to trade in Bitcoins. It is a crypto-currency that means that it can not be easily counterfeit but before anyone starting to buy in this new currency, it would be prudent to understand the risks.
Bitcoins are not issued by a central bank or a government, so there is no responsibility. If you are dealing with dollars, euros or books, you have the assurance that the government behind it will honor the debt while Bitcoins does not provide any guarantee. The fact that no one really knows who made this currency, so there is no way to know if it could be stolen from our eyes.
These bitcoins are stored in a digital portfolio that can be encrypted on your computer. Although this should provide a sense of security if your computer is lost, your Bitcoins are also gone. It’s not like a credit card where you can get a replacement and continue as nothing has happened.
Although the safety of this currency is a far concern, the biggest concern is the value of it. The perceived value of a bitcoin may change in a moment and unlike FIAT currencies that are supported by hard assets belonging to a country if a Bitcoin value gives you up, you do not have anything value.
There are some exchanges in the world who sell and buy bitcoins, but you should not buy them thinking they will increase value. They are a digital commodity that some would classify like an “FAD”. Tomorrow, it could lose all its real value and never recover.
So, to summarize the risks, you have no real security with Bitcoins because they are not provided by a government. The value so volatile and could be reduced to zero in a heartbeat and the mere fact that the currency is only important for a few years, it was not reliable.
If you are looking for a way to preserve the value, precious metals like gold, silver and platinum can be more beneficial because they have been used for centuries as a means of exchange.
