risks in starting a Bitcoin Business: Bitcoin or Cryptocurrency business is an exponential growth spurt. The main reason being the increase in the value of this unregulated digital currency. Over the last year alone, Bitcoin had a 750% increase in its value. Looking at that number, anybody will make a numb for a minute as to why didn’t I purchase or mine this Bitcoin when I had the chance to.
Today, we will discuss all the risks you need to be aware of before starting a Bitcoin business.
Before we talk about the risks involved, ask yourself this question: How well do you know the Bitcoin trading process?
You need to know how it works before you can start a business. I assume that you already need to know the process well enough to think about starting a business on Bitcoins. There are many risks involved in any business irrespective of the type and here, you will face a lot of those risks as well.
Common risks involved while starting a Bitcoin Business are:
The prices of these currencies are extremely volatile. Without any prior information to analyze, even the experts in the field are skeptical about making an investment to buy Bitcoins. With just the herd of speculators and imperfect information, people are investing in an unbalanced and unregulated or decentralized currency system. This may lead you on initially to a certain extent to later on burst and create huge losses everywhere.
Like stock, it is neither a commodity nor currency
Due to a lot of grey areas in the Bitcoin mining and trading, you will not have a clear understanding of its origin. Mining this currency online with complex mathematical formulae, none give the guarantee of cryptocurrency being a commodity. Since no country or government claims controls over this, so it will not fall into the currency category either. Without a tangible asset as back up, Bitcoin investment is a huge risk since its value keeps increasing by sheer demand.
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Bitcoin:Don’t understand? Don’t invest!
Centralized banks show no interest in the Cryptocurrency since they do not understand the complete concept of it. To be completely frank, not everyone does understand everything about this digital currency and yet they make an investment. If you are starting a bitcoin business, I would say think twice before you start. A lot of dark areas surrounding this currency are yet to reveal itself and banks are expecting this to be its downfall. Global banks do inform their consumers to not be hasty while investing in this currency and to do your homework before you proceed.
Decentralized – No guarantee and Irreversible
Like any normal currency is associated with a banking system, Cryptocurrency is not controlled or associated with any such system. It is completely decentralized and not governed by any banking laws from any country. This leads to a lot of questions about the guarantee of your funds which is a big no; sorry to say this but there is no guarantee over the funds you use to buy bitcoins. In case you get ripped off with a bitcoin transaction, the process is irreversible. This is a risk that you need to be ready to take while investing in unregulated schemes.
Not yet legalized
Is bit coin legal in your country? Not a single country is has declared Cryptocurrency as a legal currency, but they don’t call it illegal too. It’s similar to Schrodinger’s cat, the cat might still be alive inside the box or dead, we won’t know until we open the box. Even after exclusive press releases from banks all over the globe, people are still investing in this currency, which makes me think twice about investing hard earned money over something so vague.
Fraud and Ponzi schemes
You need to be prepared to accept losses in case of fake currency; it is very common and abundant since hackers tend to sell fake currency to rip you off. Many shady schemes are also being advertised everywhere to get you buy their coins and then they go bottoms up without any notice. You need to do your research before buying any digital currency.
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Many startups have had success and many didn’t while dealing with Bitcoins. It always depends on all your smart decisions and timing to help you move forward with this business. I hope you have a better understanding of the risks that you are about to face when starting a Cryptocurrency business.