Why You Should Never Invest In Bitcoin

Why you should never invest in bitcoin

Why You Should Never Invest In Bitcoin

It seems like you can’t go anywhere nowadays without seeing or hearing the word Bitcoin or cryptocurrency. Online and off, this digital currency has taken the world by storm.

Since its creation in 2009, Bitcoin has had tongues wagging, albeit in smaller circles; but in recent years, due to the price hike, it’s been making headlines. Today, you’ll be hard pressed to find any social media platform that doesn’t look like a shrine to this elusive currency.

But is it really worth all the hype?


What is Bitcoin?

Bitcoin is a type of digital currency that’s created and stored electronically in the form of blocks. It was invented by Satoshi Nakamoto, an anonymous individual whom many suspect is actually a group of individuals working for the government.

Every Bitcoin transaction is registered as a public record for anyone to see on the blockchain. This means that all transactions are traceable and verifiable.

Bitcoin is a decentralized currency, which means that it isn’t controlled by any bank or government. In order to buy and sell Bitcoin, you need an internet connection and a digital wallet.

In the rest of this blog post, we’ll discuss why Bitcoin is a terrible investment for most people, and why you should stay away from it if you’re afraid of losing money.


The price of Bitcoin has been notoriously volatile, and it’s not just in a bear market either. In January 2018 alone, the currency lost more than half of its value, before continuing to plummet further, and didn’t recover until the end of 2020.

This is what makes investing so risky with Bitcoin: you can’t predict when, whether or to what extent it will go up or down.

And the more volatile a market is, the higher your risk of losing money becomes!

High fees

There are 2 types of fees associated with Bitcoin that you need to be wary of, both of them potentially very high.

Exchange fees

As a result of the volatility, and due to the unregulated nature of the crypto space, exchanges often charge high fees for trading between fiat currency (i.e. dollars, pounds, euros etc.) and cryptocurrencies.

For some exchanges, like Coinbase, the fee can be as high as 4% when exchanging fiat for Bitcoin et al.

Transfer fees

These fees are never the same and can range from low, reasonable to extortionate! These are the fees you pay to the miners who secure the network and confirm your transactions. You pay these to transfer your coins from one Bitcoin address to another.

For some coins, Ethereum springs to mind, these fees could cost more than the amount you’re trying to send!

Prone to scams

There have been countless cases of people falling victim to scams, with many losing thousands (sometimes millions) of dollars.

One such example of an ongoing scam is where fraudulent Twitter users pretending to be celebrities promise to double the Bitcoin of unsuspecting people who send Bitcoin to their wallets. Naturally, the thieves give them nothing, and they run off with their coins.

The unregulated and untraceable nature of the blockchain means that thieves can get away quite easily with their ill-gotten gains, and there are almost no repercussions.

Easy to lose access to your funds

Bitcoin and other cryptocurrencies use digital wallets for storage. These are very long, auto-generated strings that you can access anywhere, so long as you have your password.

The password is usually a random sequence of words, and you’re warned to keep this safe because if you lose this or forget it, you will never be able to access your funds again. NEVER!

This is because you are the only person with access to the wallet and password once you generate them. There is no system or institution that can recover this information for you.

There have been numerous stories of people who had thousands of Bitcoin worth hundreds of millions of dollars saved on old computers they threw away. This is a real danger with cryptocurrency.

And even if you don’t make a mistake with your password, sometimes wallets just get hacked, usually because they’re compromised by malicious software on your computer when you generate them.

Limited regulation

The lack of government regulation in the cryptosphere is both a blessing and a curse. A blessing because it means you can move your money freely and without limitations across countries.

You can essentially accept payment for almost anything without catering to the whims of traditional financial institutions like banks, credit card companies, and online payment platforms (PayPal and Stripe to name a few).

However, the downside is that a lack of regulation means fraud is rampant, and there is no protection for your funds.

In the past, when cryptocurrency was in its infancy and far less secure, the market was a free for all, which saw crypto exchanges go bankrupt or owners run off with clients’ money (a “rug pull” as it’s known in the cryptoverse).

You can read about the most famous example, the Mt. Gox debacle, here on Investopedia.

The rules keep changing

Most of the world’s governments are still trying to decide what to do about Bitcoin and digital currency in general, so it’s no surprise that any regulation we do get on the matter is ever-changing or just downright vague.

Additionally, governments are afraid of the power Bitcoin has to disrupt their control over people’s finances. With fiat, governments control every aspect of that, but they lose their power with digital currency. For this reason, they continue to treat cryptocurrency like the red-headed stepchild.

This creates uncertainty and usually has a negative impact on prices.

Too much identification required

Most if not all crypto exchanges have to comply with something called KYC (Know Your Customer).

What is KYC?

KYC is a process in which an organization verifies the identity of its clients, as well as their source of funds.

The reason this has been implemented for crypto exchanges is to protect against illegal money laundering and terrorism financing.

What are some problems with KYC?

Many people have complained that KYC is too invasive. Proving your identity not only involves sending a copy of your passport or driving license, but now requires that you show your face live whilst holding your ID!

This creates privacy problems because this information can be saved indefinitely, even if a customer decides to close their account.

There’s also the risk of making yourself a target if the information gets into the wrong hands. When bad people know how much crypto you have and where to find you, you’ll be a sitting duck for thieves and other criminals.

It’s intangible – based on nothing

What is the gold standard?

The gold standard is a monetary system in which a country’s currency is backed by or redeemable for gold and vice-versa.

The United States used this standard from 1879 until 1933, when President Franklin Roosevelt demonetized gold as an emergency measure to combat the Great Depression.

Note: The gold standard hasn’t been in effect for a long time in any country, and governments have been printing money at will for decades.

The one thing that all fiat currencies have in common is that they represent something of tangible worth – whether a physical commodity or an amount of money (seemingly) backed by gold.

The trouble with Bitcoin is that it has no value other than what people are willing to pay for it. And in the minds of many, this means it’s worthless.

Could lose value at any moment

To piggyback off the previous point, once something has no value in the eyes of the people, it’s easy to see why the price can sink so rapidly and steeply, oftentimes overnight.

Bitcoin’s volatility is legendary, and has been ever since its inception. Much of this is based on the fact that, when all is said and done, to the masses it is nothing more than complicated numbers on a computer.

The market is too easily influenced

This is also in relation to the relative intangibility of the coin, where many people are terrified that it has no value, and thus can be easily influenced to sell when they hear even a hint of bad news.

There have been countless times when some bigwig, some country no one’s heard of, or some random person with media clout puts out a statement calling Bitcoin a scam, sending the whole crypto market tumbling.

A recent example of this was in May 2021 when Elon Musk, the CEO of Tesla, released a statement that his company would no longer accept Bitcoin as a payment method due to concerns surrounding mining and its energy consumption.

It is mine and many others’ belief that these people do this in order to buy Bitcoin at a discount when foolish people sell theirs, pushing the price down. This is known as “buying the dip”.

Now that you know some of the many pitfalls associated with investing in Bitcoin, you might still be wondering:

Should I invest in Bitcoin?

Well, the answer is: it depends.

There are certain people for whom Bitcoin investing would be a good investment. The following are present in people who are more likely to do well investing in crypto:

  • money to lose – the rule of thumb is never to invest money you can’t afford to lose. So don’t use your rent money to buy Bitcoin

  • a high risk tolerance – if you don’t scare easily then you might do well in crypto

  • aware of the volatility – Bitcoin’s price will drop, and it will bounce back. You have to be prepared for this at all times. Don’t ever assume a steep decline is price is the end of the coin

  • patient – the greatest gains with cryptocurrency are usually seen over a long period of time: years. So you should be someone who can hold for a while (or HODL, as they say in the cryptosphere).

How can I keep my Bitcoin safe?

Consider buying a hardware wallet.

What is a crypto hardware wallet?

A hardware wallet is a physical electronic device which stores your cryptocurrency offline. The Ledger Nano S and the Trezor are examples of popular hardware wallets.

If you’re not actively trading Bitcoin (or any other digital currency), then you should consider storing your coins in one of these, so that they’re safe and in your possession at all times.

Please note: you should only ever buy hardware wallets from the companies themselves, never through Amazon, eBay or any other platforms.


This article isn’t so much to deter you from investing in Bitcoin as it is to warn you of the risks. The truth is, I am a big proponent of Bitcoin and cryptocurrency in general, and I myself have invested in a variety of them.

So this isn’t coming from a place of contempt. I’ve been in this game for years now, and I’ve seen and experienced just about every pitfall you can imagine. It’s a risky space, and one you need to be absolutely sure you understand before you jump in.