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Important to know -Disadvantages of Bitcoin Investment

Risk of theft due to hacking

Since the security of Bitcoin is supported by technologies such as blockchain, the risk of tampering is much lower than generally imagined, but the weaknesses in the security of virtual currency exchanges and other wallets Note that there exists. So, use trusted bitcoin trading sites like to avoid this type of risk associated with bitcoin. Click on the image given below:

Although many people misunderstand, most of the hacking damage so far has been aimed at the virtual currency storage system of the exchange, not from the blockchain. Therefore, in order to reduce the risk of theft, not to choose an exchange called a cold wallet, which strictly implements offline secret key management measures that are not connected to the external environment, let alone use the cold wallet. You should also consider doing.

Exchange risk of bankruptcy

Legal regulations for cryptocurrency exchanges are progressing worldwide, and the approval of the Financial Services Agency is indispensable to start the cryptocurrency exchange business in Japan, but compared with existing financial institutions such as banks and securities companies. Since it has a short history, it can be admitted that it is still inferior to the public trust.

If the exchange goes bankrupt due to deterioration of business and the underwriter of the business does not appear, there is a possibility that you may lose the bit coins you had deposited.

Diversified investment between virtual currencies is hard to work

In the case of foreign exchange transactions such as FX, you can make a diversified investment by selling the US dollar and buying the euro, paying attention to the difference in price movement correlation between currencies. However, under the current circumstances, when virtual currencies fall against legal tender currencies, currencies other than Bitcoin (BTC) (Altcoins) also tend to decline at the same time, so even if you have multiple virtual currencies, they are dispersed. It can be said that the investment effect cannot be expected.

Liquidity is low and price movements are sharp compared to traditional assets

Since the market capitalization of Bitcoin is quite small compared to the main investment targets such as foreign exchange transactions and stocks, the price fluctuates at once when a large investor participates in trading. Also, there is no circuit breaker system that forcibly stops trading when the price fluctuation range exceeds a certain level, so the volatility is extremely severe.

Bitcoin payments are rarely used

Virtual currency such as bitcoin can be used as it is as “money”, but at present there are few opportunities to use bitcoin for payment, and in reality it is almost impossible to use it.

This is mainly because the adoption of Bitcoin is not progressing due to problems with the current system, such as the price movement of Bitcoin is rapid and it takes time from remittance to payment. The reality is that we can hardly expect it.

Tax disadvantage compared to FX

In the case of FX trading, the tax on profits is 20.315%, which means that even if you lose money, you can carry it forward for 3 years. Similarly, even if you invest in stocks, you can carry over for 3 years.

On the other hand, in the case of virtual currencies, taxes are “general taxation” as miscellaneous income, so the more you earn by adding to your salary income or business income, the higher the tax rate. The maximum income tax rate for progressive taxation is 45%, which is extremely high at 55% when combined with 10% inhabitant tax, and the loss cannot be carried over to the next year.

The bitcoin market is overwhelmingly small compared to the exchange market, and the number of people who own it in the world is still small. However, recently, large companies have begun to build systems using blockchain technology, and even large investors are investing bitcoin in diversified investment as an asset that does not depend on a particular country.

As a result, if we can establish our position as a financial product, the value of assets will rise as we become the investment destination of many investors, so future trends are drawing attention.