Bitcoin is the most popular cryptocurrency in the world. However, it’s not without its faults. Bitcoin has seen a huge price increase over this past year, and as such, experts are debating whether or not this is an indication of bitcoin peaking for now. To help you make your decision on what to do with your bitcoins, here are some reasons why bitcoin might have peaked for now:
- Bitcoin is not a currency. It is an asset:
Many people see bitcoin as a currency. However, it’s vital to realize that this is not the case. It might have started out as one, but now it behaves more like an asset – basically something you own and are willing to trade for goods or services (or even another type of cryptocurrency). Additionally, Bitcoin is not legal tender, so you can’t use it to pay your taxes or buy a house.
- Bitcoin’s price volatility:
One of the main reasons behind bitcoin’s massive increase in popularity is its incredible price growth. However, Bitcoin has seen huge fluctuations, and as such, experts believe that this kind of instability makes it unsuitable for most. There are also concerns that bitcoin has become an asset bubble which is always dangerous. If you want to trade securely, then you have to do it through the best bitcoin trading platform.
- Bitcoin’s association with illegal activity:
Like any other cryptocurrency, Bitcoin can be exchanged for traditional currency on exchanges. In addition to this, people have been using bitcoins as a way of transacting illicit goods and services via darknet markets which are undoubtedly dangerous. This has had some impact on the popularity of bitcoin, but it doesn’t seem like enough to justify its recent increase in price.
- Bitcoin mining:
The process of Bitcoin mining requires a great deal of computing power and energy usage, which has led experts to believe that the cost involved is not worth it for what you get back from your investment. The increased efficiency of hardware means that there’s less incentive for people to mine bitcoin as they can now make more money by using their hardware to mine other cryptocurrencies that are still profitable.
- Bitcoin is not a stable currency:
You can think of bitcoin as similar to gold. Its price isn’t fixed, and it tends to fluctuate wildly. This means you could make or lose money very quickly if the value changes while you hold onto bitcoins – which might be something worth considering before investing in them. Plus, the price of bitcoin is not fixed, so if you are looking to sell anything in exchange for it at a later date, the amount might have fluctuated since your original investment.
- Bitcoin is not anonymous:
Many people mistakenly believe that bitcoin protects your anonymity. However, the reality of it is very different. All transactions are recorded on a public ledger known as the blockchain and can be traced back to an individual’s personal identity using just their wallet address (which acts like a pseudonym). It’s possible for someone with enough computer power to be able to isolate individual people’s transactions and link them back to their identity. For example, in 2013, a man was sent bitcoin after an extortion attempt from someone who found his name on the blockchain and linked him with it.
- Transaction cost associated with bitcoin are high:
The transaction cost associated with bitcoin is high because the price of producing one coin is over $1000. This means that you will have to pay a large amount for someone to accept it as payment. This is due to the fact that no one wants a $1000 coin, and they would rather be paid in something else.
- Peak and decline:
At this point, bitcoin’s price is high enough that it might be a good idea to trade them in for something else. This means that you should consider selling your coins before they drop any further, as the peak has been reached now. However, if you are looking at investing more money into bitcoins, then this might actually be a good time to do it, as the value is only likely to increase.
It seems that the end of bitcoin is upon us, but this isn’t necessarily true. Bitcoin has seen a huge increase in both its popularity and price over the past few months, however, it can be challenging to determine whether or not this is an indication of bitcoin peaking for now.
- There are only 21 million bitcoins in circulation:
This means that there is a limited supply of the coins, and as such, it’s possible for them to increase in value if they are in demand. However, this also makes bitcoins more volatile than standard currencies, which can be both good news or bad news, depending on how you look at things. If you have money invested in bitcoin, then this volatility could be good news for you as the increased value of your investment would mean that your overall worth is increasing.
If you’re not too sure about what to do with your bitcoins and whether or not they’ve peaked for now, then it’s a good idea to just sit on them for the time being. If you still think that their value might increase in time, then there is no point selling them off at this moment, only to buy back when the price is higher.