Important things you have to know before investing
If you are about to start exploring the world of Bitcoin, there are some things you should know. Bitcoin allows you to exchange money differently than you normally do at the bank. Therefore, it is advisable to spend some time to inform you before using Bitcoin for important transactions. Bitcoin should be treated with the same care that your wallet would treat, ATM PIN, etc, or in some cases even more!
Protect your purse
As in real life, your portfolio must be protected. Bitcoin allows you to transfer money anywhere easily and allows you to have control over your money without the need of an intermediary bank. These great characteristics also entail security risks. At the same time, Bitcoin offers high levels of security if used correctly. Always remember that it is your responsibility to take the appropriate measures to protect your money. More information on how to protect your wallet.
The price of Bitcoin is volatile
The price of a bitcoin is unpredictable, it can increase or decrease in a short period of time due to its young economy, its novel character and sometimes illiquid markets. Therefore, keeping your savings in bitcoin is not recommended. Bitcoin should be considered as a high risk asset, and you should never store money that you cannot afford to lose with Bitcoin. If you receive payments with Bitcoin, many service providers allow you to convert them instantly to your local currency.
However, I like many of us who are in the world of Cryptocurrency rely more on Bitcoin than in any other fiduciary currency like the dollar, the peso, the euro or any other currency that comes to mind, since This type of coins issued by central banks and government together print the amount they want without accountability to anyone, simply devaluing your money with what we call inflation previously explained.
Bitcoin payments are not reversible
No Bitcoin transaction can be reversed, they can only be reimbursed by the person receiving the payment. That means that you should be careful to do business only with people or organizations that you know and trust or that have a good reputation. For their part, companies need to have controlled the payment requests they show to their consumers. Bitcoin can detect typographical errors and will not normally allow you to send money by mistake to an invalid address. In the future there could be services that offer more priority and protection to the consumer.
Bitcoin is not anonymous
Protecting your privacy with Bitcoin requires some effort. All Bitcoin transactions are stored publicly and permanently in the network, which means that anyone can see the funds and transactions of a Bitcoin address. However, the identity of the user who owns the address is not known unless it is disclosed during a purchase or for other circumstances. This is one of the reasons why Bitcoin addresses should only be used once. Remember that it is your responsibility to adopt good practices to protect your privacy. Read more about how to protect your privacy.
Instant transactions are less secure
A Bitcoin transaction is usually received in a few seconds and begins to be confirmed within 10 minutes. During this period, the transaction can be considered authentic but can still be reversed. Fraudulent users could try to cheat you. If you cannot wait for a confirmation, you can pay a small fee or use a system to detect unsafe transactions. For amounts greater than $ 1,000 USD, you should expect to have 6 or more confirmations. Each confirmation exponentially decreases the risk of reversing a transaction.
Taxes and regulations
Bitcoin is not an official currency. That said, in most territories you will have to pay rent, payroll and taxes on profits in everything that has value, including bitcoins. It is your responsibility to make sure you apply the taxes and other regulations issued by your government or municipality.