TLDR - It is probably a bad idea for you to invest in bitcoin. Instead consider the S&P 500 which has never lost value in a 20 year period.
I'm very excited about bitcoin. It is going to do to payment companies what the telephone did to the telegraph. If that does happen an individual bitcoin is going to be worth tens of thousands of dollars.
Lately I've been wrongly advising friends to put some money into bitcoin, but by some I really mean hundreds or thousands of dollars. I claim 'an amount you can lose without issue', but if something is going to go up soooo much why would anyone get in for just a few bucks? If they believe what I'm saying why in the world would they just get $10 worth?
9 Reasons not to Invest in Bitcoin
Yesterday I blogged about bitcoin and unfortunately recommended readers buy some. Some friends brought up good counterpoints and I've reversed my position. Here is why you should not invest in bitcoin
- Bitcoin could drop in price 99% tomorrow. In fact on 8/17/2012 it dropped 30% in an hour.
- 100% of your bitcoins could be stolen from your online wallet, stolen from your computer, stolen by your online wallet, stolen by a virus on your computer, stolen by a virus on your smartphone, stolen by your online wallet host, and stolen by security flaws in your online wallet software.
- The online wallet you hold your bitcoins with could go out of business.
- You can lose 100% of your bitcoins by forgetting your password or throwing out a hard drive.
- You can easily violate US laws you are unaware of. I was unaware of the Foreign Account Tax Compliance Act or of the Banking Secrecy Act Report of Foreign Bank and Financial Accounts requirement which I could easily have violated.
- Tax compliance is difficult. You should plan ahead but probably won't.
- Bitcoin price swings will stress you out if your bitcoins go up a lot in price.
- Bitcoin price swings may cause you to sell at the wrong time, buy at the wrong time, sell at the wrong time, over and over and over. Read this man's unfortunate story.
- There are lots of bitcoin scams like this ponzi scheme.
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