There’s no doubt that BitCoin is currently a valuable cryptocurrency, but that doesn’t mean it will stay that way. It’s hard to argue against the fact that the coin itself is incredibly volatile. Even more so than a typical currency, BitCoin is prone to wild swings. While this is the nature of any commodity, it’s something that investors much consider. BitCoin is by design something that will always have a very volatile value. There are risks and disadvantages inherent in this coin, and discussing the volatility issue is something that needs to be done sooner rather than later.
Bitcoin Has Flash Crashes All The Time
BitCoin’s value is tied to the blockchain. There’s a limited amount of BitCoin available, and the finite nature of the resource is always going to wreak havoc with how investors look at the currency. On one hand, this means that BitCoin becomes more valuable over time. On the other hand, it also means that BitCoin will eventually reach critical mass. One cannot simply manufacture more BitCoin in order to deal with market problems, so there will never be a point at which someone will be able to deal with the market effectively. There will never be a point when this is a truly stable currency.
BitCoin’s inherent issue is that it has no ‘real’ value. The value of BitCoin is and always will be decided by the users. If other coins become successful, the price of BitCoin will fall. A currency that’s tied entirely to user perception without anything at all to back it up is always problematic. Even compared to traditional currency, which is really only backed by faith in an economy, there is nothing propping up BitCoin but belief. As the belief in the currency waxes and wanes, it will become more difficult for investors to make realistic investments.
Volatility Will Always Plague Bitcoin
Volatility is built into BitCoin, even if that wasn’t an intended feature. There’s no strong base there, no ability to regulate the currency, and essentially no checks against wild swings in the market. Investors who seek out this cryptocurrency are going into an entirely unregulated arena where things can change in a moment. While that might seem exciting to some, it does leave most investors with the feeling that BitCoin could crash at any moment. This isn’t a particularly safe investment – and it’s yet to be seen how its volatility issues will play out on a larger stage.