Quote from: Kimberl2020 on August 11, 2021, 06:53:59 AM

There are five risks in the use of Bitcoin:

The risk of Policy
From a macroeconomic perspective, due to the “constant total amount” of Bitcoin, its circulation will be accompanied by the flow of goods and services, which has a small transmission effect on inflation. Adding the weight of Bitcoin to the world currency can weaken the transmission effect of monetary policy.

1) Bitcoin breaks the central bank's monopoly on currency issuance. Due to its technological complexity, innovation and global nature, it is difficult for the central bank to monopolize its issuance rights.

2) Cash in circulation or deposits in the banking system may be replaced by Bitcoin, which will have an impact on the base currency and currency multiplier; in addition, the existence of Bitcoin has an impact on the speed of currency circulation and its price level.

3) The global nature of Bitcoin obscures the national boundaries that restrict the use of currency, and it is difficult for a country's monetary policy to isolate the influence of other countries' economies and policies.

The central bank will introduce policies from various aspects to suppress Bitcoin, so as not to affect its monetary policy.
The risk of the law

In August 2013, Germany announced the recognition of the legal status of Bitcoin and it has been included in the national regulatory system. Germany is the first country in the world to recognize the legal status of Bitcoin.
In May 2016, Japan approved the digital currency regulation bill for the first time and defined it as property.
On June 9, 2021, the El Salvadoran government passed a bill to make Bitcoin a legal tender here. From September 7th, it will become the country's legal tender. El Salvador will become the first country in the world to use Bitcoin as a legal tender.

At present, Bitcoin is only protected by the laws of various countries as a virtual commodity rather than a currency.

Only a few countries recognize this status of Bitcoin and do not support it as a major currency.

In cross-border Bitcoin infringement cases, because countries have different legislations on Bitcoin and have different characterizations of Bitcoin, the resolution of related disputes involving Bitcoin is relatively lagging.

The risk of Speculation
Bitcoin does not have national credit or physical assets as protection, and the price may fluctuate sharply, which is extremely risky for investors. However, in my opinion, speculation is a high risk but also an opportunity, and it depends on the individual.
The risk of Money laundering
Bitcoin has the characteristics of anonymity and freedom from geographical restrictions. The flow of funds is difficult to monitor, and it will be very easy to circumvent government supervision, making it easy for criminals to conceal the source and direction of their funds, which provides convenience for money laundering, terrorist financing and evasion of sanctions .

They buy other people’s bitcoins through the exchange platform, and then bring the bitcoins to other platforms or their own wallets. Through multiple transfers, the tracking path is difficult or directly impossible to trace, and then through overseas trading platforms or black markets or directly Commodities purchased overseas are exchanged for foreign currency to complete a series of acts such as money laundering.

The risk of Substitution

Bitcoin still has shortcomings such as lack of credit guarantee, poor security performance, and easy to cause deflation. At the same time, it has to face the competition of various emerging altcoins, and there is a greater
risk of substitution! Although I think this possibility is very small.

The biggest risk of Bitcoin is that it is suppressed by policies internationally, and the giant whale sells Bitcoin, causing panic! This is not impossible! Because it has happened many times before!

EewardDean

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