Once the central bank in Cyprus froze bank accounts and limited the quantity of cash that might be withdrawn from bank accounts it created an enormous uproar that was felt all over the world. If consumers did not get access to money how could they trade the things needed to keep on in our modern world? The truth is they cannot so consumers all over the world started to search for safer alternatives to fiat currency.
Fiat Currency
It is currency which has no tangible value apart from what the federal government assigns to it. Individuals are looking for a solution to store their buying capacity to protect themselves from having bank accounts frozen for indefinite intervals. Lots of people started trading in Bitcoins.
This can be a crypto-currency which means it can’t be easily counterfeited but before anyone starts buying into this new currency it might be prudent to comprehend the risks. Bitcoins aren’t issued by any central bank or government so there is absolutely no accountability whatsoever.
Currency
If you’re coping with Dollars, Euros or Pounds you have the assurance that the federal government behind it will honor your debt while Bitcoins usually do not provide any guarantees at all. The truth that no-one truly knows who made this currency so there is absolutely no way of knowing whether maybe it’s stolen from under our eyes.
These Bitcoins are stored in the digital wallet that may be encrypted on your pc. While this should give a sense of security if your personal computer is lost your Bitcoins have died as well. It isn’t like a credit card where you are able to get a replacement and keep on like nothing has happened.
As the security of this currency is really a concern by far the largest worry may be the value of it. The perceived value of a Bitcoin can transform in an instant and unlike fiat currencies which are backed by hard assets owned by way of a country in case a Bitcoin value drops you have nothing of value at all.
The Risks
There are many exchanges all over the world that sell and purchase Bitcoins, but you shouldn’t buy them thinking they will rise in value. They’re an electronic commodity which some would classify as a “fad”. Tomorrow it might lose all its real value rather than recover. So to recap the risks, there is no need any real security with Bitcoins being that they are not supplied by a government. The worthiness if highly volatile and may be reduced to zero in a pulse and the simple proven fact that the currency has only been with us for a couple years shows it isn’t shown to be reliable.