The dangers of Bitcoin
All investments carry a degree of risk, and there’s no getting around that. But the risk that comes with buying a digital currency like Bitcoin well exceeds the risk of putting money into an established, quality stock.
For one thing, while Bitcoin may have been around longer than other digital currencies, it’s been around for a lot less time than many of the companies that trade on the stock market today. And while equities experience their share of price fluctuations, Bitcoin has seen some even more intense swings.
But there are other risks associated with Bitcoin. For one thing, we don’t know if it will become a widely accepted currency. If it doesn’t, the demand for it is apt to plummet. And if Bitcoin demand drops, so will its value.
Also, we don’t know what sort of regulatory issues might pop up for Bitcoin and other digital currencies. Until more clarity emerges on that front, it remains a risky prospect.
All of this risk doesn’t necessarily make Bitcoin a poor investment choice. But is it a smart investment choice for retirement? Probably not.
Because Bitcoin has only been around for 12 years, there’s no way to predict whether it and other cryptocurrencies will be trading two, three, or four decades down the line. And if you’re many years away from retirement, that’s an unsettling thought.