No matter where you stand on bitcoin, we can agree on one thing: It’s polarizing. Some investors believe it’s the way of the future and others think it’s a scam.
Bitcoin Is One of the Most Volatile Investments You Could MakeBitcoin goes through incredible spikes and plummets in value. Back in July of 2010, a year after bitcoin was released to the world, a bitcoin was worth only eight cents. The value jumped all over the place until it really started to make some waves in 2017. One bitcoin reached a value of $1,000 early on, then zoomed to $5,000 in October, then doubled to $10,000 in November. By mid-December one bitcoin’s value was almost $20,000. The bubble finally burst, and the value dropped to about $3,500 by November 2018.
Bitcoin Has a Bit of an Identity CrisisDoes bitcoin have more in common with the U.S. dollar or with gold? The answer is both. While bitcoin is a currency, Uncle Sam has a different take. The Commodity Futures Trading Commission sees bitcoin as a commodity (like gold), while the IRS treats it like property which means—you guessed it—they can tax it.
Bitcoin Is Not Regulated by Any Central Bank or NationBitcoin has been shrouded in mystery ever since an unknown person named Satoshi Nakamoto released it into the world back in 2009. It operates without oversight from any bank or nation-state, meaning it’s exchanged peer to peer. It’s like the Wild West of currencies—there’s no marshal to uphold the law. For some, this is an attractive feature. Others recognize the risk that comes with zero regulation.
Bitcoin Is Widely Used for Illegal ActivitySince all bitcoin trading is handled anonymously, the cryptocurrency scene is a hot spot for cybercrimes. All sorts of shady things, from blackmail to phishing to Ponzi schemes to deals done on the dark web, take place using bitcoin.
Of course, there are plenty of upstanding people who use cryptocurrencies as well. But hackers who know a lot more about coding and software than the average Joe can use that knowledge to their advantage—so be careful.