Bitcoins also have certain disadvantages that are not limiting, although they deserve to be taken into account. Since some of these can also be considered advantages for a certain group of users. For example, many prefer the anonymity that accompanies operations. However, the lack of transparent information about users, added to the impossibility of reversing the operation in error, is a disadvantage and opens up opportunities for the criminal world.
Additionally, since any authority does not regulate operations, anyone can try to extract the currency on their own using the computing power of their computer. So no country can guarantee its stability and values with its authority. This allows the price of this cryptocurrency to lend itself to speculation. Also, a possible drop in the demand for BTC can negatively affect your savings.
Is my account private?
A bitcoin account is similar to any bank account, only more secure. There the acquired bitcoins are registered (they cannot be deposited due to lack of physical form), and from there, all kinds of transactions can be carried out as in traditional banking through a private key, with the advantage that transfers can be made or received to and from anywhere in the world quickly and safely.
Although its safety depends to a greater extent on the user, the Bitcoin system is inviolable thanks to strong cryptography. However, we say that the weak point is the user himself because he must protect his private key. If you use a questionable app and deposit your private keys on it, your BTC could be stolen. So choosing the right wallet is very important. One that we can trust and that is safe from hacker attacks.
What happens if I lose my bitcoin key?
Your private key is your access key to your bitcoin account, just as it happens in traditional banking. So if you lose your bitcoin key, you will lose all chance of getting your bitcoins back. Remember that bitcoin does not obey any regulations from financial entities. You will not be able to create another recovery key. So if you lose your password, there is no way you can get your money back.
Additionally, if you lose your password and someone else “finds” it, that person can enter your account and get your savings in BTC. Bitcoin transactions are extremely secure. As we have already said, its system is inviolable, but it does not discriminate if the person who is entering with your password is you or not. So, the risk of losing your bitcoin key is that you can lose all your money without any possibility of recovering it.
Can bitcoin become a referral network?
It is highly unlikely that this bitcoin network can successfully become a benchmark for other types of cryptocurrencies. However, many people use the value of bitcoin as a comparative reference value of other virtual currencies. However, this is not a safe practice, nor can it guarantee its result since each cryptocurrency moves in its field with its characteristics and rules that govern its use and commercialization.
It must be remembered that bitcoin, like all virtual currencies, moves at its own pace. And, each network has its particularities depending on the convenience of all the people involved in the different negotiations that are generated there. Therefore, although many are already thinking about using bitcoin as a reference, it is unlikely that it will prosper.
Can it become a bubble?
Rapid price increases do not automatically mean a bubble. A bubble is an artificial overvaluation that leads to a downward correction. The price of Bitcoin fluctuates due to options based on the individual human behaviour of hundreds of thousands of market participants, who seek the correct price according to their convenience. And, many factors can always directly or indirectly influence these fluctuations to occur.
The reasons that can generate this fluctuation can include the loss of confidence in Bitcoin. The big difference between value and price is not based on the fundamentals of the Bitcoin economy. Heightened interest from the press stimulates speculative demand, fear of the uncertain, and old-fashioned irrational enthusiasm, in addition to the own ambition of the participants that can generate expectations not in line with reality.
A key is a unique alphanumeric password required to access a Bitcoin wallet. Losing that key essentially means losing your wallet. However, most of today’s wallets have backup and restore mechanisms. But the user needs to configure them before they can use them.
Bitcoin has been somewhat erratic in its prices, presenting strong ups and downs, going through several cycles of rises and falls. BTC has been conquering new heights throughout its history, only to have a massive drop immediately after that. Its value is unpredictable; it changes quickly and drastically, which can cause significant financial damage to a reckless investor who does not know how the market works.
The Bitcoin technology has not yet been developed, and it continues to grow as developers are added to the project. Also, the currency has not yet been adopted in a massive way, which implies that we do not know how it will work when everyone uses it. We do not know if the network will be able to support mass adoption or if, on the contrary, it will collapse.
Is Bitcoin a pyramid scheme?
Warren Buffet, one of the most popular venture capitalists globally, has repeatedly said that Bitcoin is a bubble and that it is not safe to invest in this asset because it does not produce anything. In conclusion, he has warned that Bitcoin will not have a good ending for investors.
However, beyond the criticisms of the man who owns one of the largest banks in the United States and the world (Bank of America), Bitcoin is not a pyramid scam. The value of Bitcoin is framed by the law of supply and demand within the market where BTC moves. Due to its limited and controlled production, as more people become interested in acquiring the currency, its value will increase within the market.
Is Bitcoin a bubble?
Since the so-called tulip fever emerged, many have been on the lookout for bubbles emerging within the market.
Robert Shiller, a Nobel Prize-winning economist, proposed a checklist that helps determine if something is a bubble. That list includes steep increases in the price of an asset, great public enthusiasm, media frenzy, stories of people getting rich, and a growing interest in the asset among the general public. The truth is that Bitcoin fulfills all these qualities.
Thanks to the volatility of the asset, during critical price drops, many think that Bitcoin ends up exploding. Nothing else in 2018, we could see how traditional media such as Forbes, The Guardian, CNBC, New York Times affirmed that Bitcoin was dying and that sooner or later, it would end up exploding.
But, Bitcoin keeps coming back after every price drop. The “bubble” continues to resist even though prices have been slashed, and prices tend to rise later to correct themselves within the market.