With the price of bitcoin being so volatile over the past few months, it is no surprise that many people have become even more weary and scared of investing in cryptocurrency. After doing some research, we’ve been able to crack some of the reasons for what scares people about Cryptocurrency. We hope to eliminate these fears. We believe that cryptocurrency is here to stay and will revolutionise the way we treat money and do business.
Reason # 1 : Fear of the Unknown
People are naturally afraid of what they don’t know. Most are afraid to understand the technology behind cryptocurrency, leading to non-acceptance. Governments are so comfortable with traditional fiat currencies that they believe any alternative would lead to chaos. Nobody knows what the cryptocurrency market will look like in the coming weeks or days. With this uncertainty, many people are hesitant to understand cryptocurrency at all. However, mass-media paves its way, and it is promoted by well-known influencers. As such it would be foolish to not learn about what cryptocurrency has to offer. After all, there are real rewards hiding on the other side of the unknown!
Reason # 2 : Lack of Government Support & Regulation
Governments are not legitimising Cryptocurrency because they are scared of losing their centralised authority. A government declares a fiat currency to be legal tender, but it is not backed by a physical commodity and governments have control over its value. This should be a lot scarier than investing in crypto, a currency that gives you full transparency and control. Many people do not trust cryptocurrency because of the lack of regulation although arguably this is one of its main advantages.
According to Bit News Today, there are ten countries known to have banned the trading of cryptocurrency all or in part; Vietnam, Iceland, Kyrgyzstan, Bangladesh, Bolivia, China, Ecuador, Nepal, Lebanon and Indonesia. Governments have full control and can dictate the use of cryptocurrency. Those who learn about and invest in cryptocurrency feel empowered because a third party is not controlling it. Thankfully, there are many countries that are not scared and they acknowledge the positive aspects that cryptocurrency and blockchain technology can bring into everyday life.
Reason # 3: Extreme Volatility
People are always afraid of losing money and rightly so. People should understand that what goes up must come down. Unfortunately, this trend is seen regularly in the crypto market. A report published by CryptoCompare reveals that volatility is “commonly associated with the risk level of the instrument. A highly volatile instrument is regarded as risky and a less volatile instrument as less risky.” It concludes that bitcoin is the least volatile cryptocurrency that any fiat currency pairs.
Over the past couple months, the price of bitcoin has had nothing short of a roller coaster ride.
Reason # 4: Taxes, even on Crypto
In 2014, the Internal Revenue Service (IRS) introduced guidelines for trading digital currencies to be reported come tax season. Of course, not everyone reports their gains from crypto but the IRS is on a hunt, targeting crypto tax evaders. This may be adding to people’s hesitancy in investing in crypto in the first place.
In highlighting reasons why people are scared of investing in crypto we can safely say that like all forms of investment, people should educate themselves before taking the plunge. In any event, from increased coverage of cryptocurrency in the mass media it is clear that cryptocurrency is a topic worth finding out more about.
Also published on Medium.