Disadvantages Of Bitcoin – A RISKY Gamble?

The disadvantages of bitcoin are, thankfully, few. Truthfully, there are some downsides to owning and holding bitcoin, and here you and I are gonna get the straight truth on some of the biggest disadvantages of bitcoin.

Show Notes

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Transcription

In all fairness, bitcoin does have some disadvantages. Here’s the biggest one: In the developed world, we take computers, consistent electricity, and on-demand internet access for granted.

But in many parts of the world, these sorts of things don’t come so easily. And of course, these would need to be readily available in order to buy and trade bitcoin.

In fact, a lot of opponents to bitcoin claim that it’s biggest liability is that you need electricity to use it. And should the power grid ever go down, your wealth would be inaccessible.

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Well, I've got two counterpoints to this:

First, if the power grid went down for an extended period, anyone owning traditional financial assets like stocks and bonds would also be unable to access their wealth. After all, The New York Stock Exchange or your investment portfolio isn’t tallied by hand on paper, right?

Second, if the power grid went down for longer than, say, a week, we’d have much bigger problems on our hands than being able to buy and trade bitcoin. Finding food and fending off marauders would suddenly become our top priorities!

Another barrier for many people is that in order to use bitcoin, a degree of technical skill is needed. I'd say this is the biggest problem with bitcoin...and it reminds me of the earliest days of the internet.

Way, way back at the beginning, the internet was hard to use! But over time, things got easier and more and more people got online. Today of course, pretty much everyone in modern countries are online and even carry the internet around in their pockets.

I think the same thing will happen with bitcoin -- it'll get easier and easier to use, just like everything else. Meanwhile though, bitcoin's technical barrier isn't too difficult for most of us to overcome.

Now next, another big downside to bitcoin is it’s price volatility. Bitcoin’s price can swing wildly up and down. Notice though that the word “volatility” is often only used when bitcoin’s price goes down. When the price is going up, no one’s talking about bitcoin’s extreme volatility.

Regardless, something for you to keep in mind regarding bitcoin’s sometimes turbulent price: As more and more individuals and institutions begin buying into bitcoin, as more and more money flows into it and as the technology matures, the volatility will settle down.

So if you can stomach some short term ups and downs, you’ll be well positioned before regular, normal people and institutions begin moving in. So in this sense, you could say that volatility is the price you pay for performance; because the long-term trend is clear.

Still, it’s prudent of course to expect some bumps (both up and down) along the way.

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