While writing this article, bitcoin Is priced at $65,286.90. Such a great time to be owning Bitcoin, right? Just last September, it was priced around $35k. The bitcoin owners are now holding on to their coins in expectation of an even greater price.
Trending in the same limelight, Shiba Inu, Dogecoin, and some other altcoins have gained popularity and reached significant value.
But there is a chance that all this cryptocurrency trading and crypto arbitrage may end with a tremendous historical bubble-bursting effect, affecting bitcoin significantly. So if you are still thinking that Bitcoin is an excellent investment, then you need to reconsider.
Reasons Why Bitcoin Is A Terrible Investment
There are practical aspects to back up the fact that Bitcoin is a terrible investment. This article will describe why Bitcoin is a terrible investment in 2022 and provide several reasons to back up the truth.
Bitcoin Has A Speculative Value
To many, Bitcoin has a theoretical value. However, Bitcoin has no physical embodiment; in fact, none of the cryptocurrencies have. If you are a stock investor, you know that your investment’s growth and failure are proportional to the company’s growth and loss.
The company’s earning, expansion, turnover, and other internal and external matters determine your growth. But when you are investing in Bitcoin, there is no tangible asset to backup your investment. The rise and fall of Bitcoin depend upon the supply and demand of the coin.
Bitcoin mining is an expensive process, and it consumes excessive energy. Currently, the most significant portion of Bitcoin is under the holding of a selected few people. Therefore, mining is presently stopped; the closed market cap is one of the reasons for its increment of value. Besides, it is decentralized, so there is no real backup.
Bitcoin Is Artificially Rare
Bitcoin is artificially rare. As I said before, bitcoin’s value is rising because it is limited in the market. But the reason why it is limited has a lot to do with its mining. The mining itself consumes energy which equals to the annual energy consumption of the Philippines.
Its expensive mining process is one of the reasons behind Bitcoin not being created anymore. For minable objects like gold, diamond, and other valuable gems, it is understandable that they are scarce or they have limited stores underground. Still, Bitcoin is scarce simply because the miners chose to make it that way.
Bitcoin Competes With Fiat Currency
As many Bitcoin enthusiasts claim, Bitcoin will replace fiat currency. If we agree to that decision, it would mean that Bitcoin is competing with fiat currencies of different countries.
Countries around the world in no way will ever adopt bitcoin and abandon their currency. Different countries have their own rules, regulations, and constitutional duties.
No central bank will ever negate its rules to adopt a trendy new currency with no legitimate issuing authority. If any country ever tries to replace its currency with bitcoin or any other cryptocurrency, it will deeply damage its monetary system.
Blockchain Is The Asset
It is not the token with a real value, the blockchain where the token exists is of true value. So if you are thinking that investing in bitcoin makes you an owner of the blockchain, you’re mistaken. Investing in bitcoin does not offer you ownership of the blockchain.
Besides, governments can reinvent the blockchain to avail overseas payment in the same way that bitcoin and other cryptocurrencies offer. If fiat money works on the blockchain and offers P2P transactions, no one will use bitcoin or any other cryptocurrencies.
There are also some cryptocurrencies with specific stocks and assets to back them up. These coins are called Stablecoins, and these coins seem way more credible than bitcoin and altcoins.
No Stabilizing Force
Bitcoin’s decentralized nature makes it a unique coin. A decentralized currency is one where the government, central bank, or no other intermediaries have authority. As a result, you can choose to spend your money the way you wish.
While all that is good for individual users, if Bitcoin were to fall, there is no authority to back up the investors. Instead, the central bank goes to the international financial institutes, banks for loans, and can sell assets, bonds, and securities to back up the currency of a certain country.
But bitcoin has no such stabilizing force or status to back it up. So its decentralized nature is both its merit and drawback.
Final Thoughts
You may profit from investing in bitcoin or any other cryptocurrencies for that matter. But a wise choice is to invest if you have disposable money. It would help if you never wagered your fortune to buy bitcoin or any altcoin.
The volatility that creates value for your bitcoin investment may take away your everything. It is ok for a casual investment. Built on a large scale, Bitcoin is still a terrible investment in the long run.
Author bio:
Ani Johnson is a passionate blogger. She loves to share her thoughts, ideas, and experiences with the world through blogging. Ani Johnson is associated with TheCBDMagazine, TheCasinoMagazine, ThePetsMagazine, TheDatingDiary.
