Every third social media profile you visit, or any forum you visit, or even any digital media blog you read, you will find the mention of cryptocurrencies.
While cryptocurrencies have been on the horizon for a little more than a decade, the last three years is when they have really picked steam. The ensuing pandemic has in many ways contributed to the rising popularity and attraction of cryptocurrencies.
However, at a time when the world is lauding Bitcoins and other cryptocurrencies for their anti-inflationary stance, there are still some skeptics who warn against investing in them.
In this article, we are going to look at some major reasons why major investors and financial gurus warn about cryptocurrencies.
5 Major Criticisms put forward by Investors and Financial Gurus about Cryptocurrencies
- Not Legal in Status-
If you look at nations and governments the world over, you will see one common thread. While Bitcoin has not been fundamentally outlawed, it has also not been deemed legal. This makes it exist in a rather grey area, which is always in a state of flux in terms of legality issues. Even if the highest court has legalized cryptocurrencies (in the case of India), the government and the central bank is not yet on board with the same.
- Too Technical in Nature-
If you are a normal human being, who does not understand anything about Blockchain, Digital Wallets, Private Keys, Bitcoin Mining, and ten other different things, how else do you know how a financial asset works? If you take what the world’s most successful investors are saying (including Warren Buffett), you should only invest in things, which you understand. Technical nature prevents many from investing and understanding Bitcoins.
- Decentralized Nature of Cryptocurrencies-
While for some the decentralized nature might work to their advantage, for others it just means a lack of authoritative security. Decentralization means that there is no one vouching for the terms of the transaction or someone who can be held accountable in case something goes bad. In the case of cryptocurrencies, decentralization can be a double-edged sword, which can be beneficial and can also be detrimental depending on who you ask.
- Lack of Integration in Formal Banking Systems-
Most of the buying, selling and trading of cryptocurrencies takes place in exchanges or trading platforms. Most institutional investors point out that if the same is done through a credible and reputable banking institution, the same can espouse confidence. In some countries like Germany or Switzerland, the same has been started in the banks. However, getting banks on board to start dealing in cryptocurrencies requires a lot of pushes.
- Immature and Price Volatility-
Probably the single biggest reason why investors and analysts critique cryptocurrency investments are because of their immaturity and volatility. The sky-high gains and falls are not good for investors looking at long-term stable growth periods. The major warning sounds are made for smaller retail investors who can lose big time following a negative government or authority announcement, which signals massive sell-offs.
Should you pay attention to what Critical Investors are saying?
While it is important that you should pay attention to what the world’s richest and most successful men are saying, we believe that you need to strike a fine balance.
Most investors who are out of tune with technology or software, do not understand the fundamentals of how Bitcoin or its associated technologies work. These critics are qualified and are worth millions if not billions. This just means that not everyone understands everything. For more information you can visit here Bitcoin Boom App
If critics are to go by, Bitcoin has been dead over two hundred times over. It has been pronounced dead eleven times itself in a year when it outclassed every other financial asset by a long margin.
Everything, which is new and revolutionary is first opposed. This includes Democracy, the iPad, and the first Walkman. With Bitcoin or other cryptocurrencies, we feel that the same is true.