Bitcoin: A Digital Rise with Shadows

The development of Bitcoin over the past decade resembles a meteoric rise, giving the leading cryptocurrency a market value of around 1.2 trillion dollars. This impressive record has made the digital currency a formidable competitor to some of the most valuable companies worldwide. Although its current valuation is 18% below its peak, the temptation to capitalize on this decline attracts many potential investors. However, before succumbing to this temptation, it is advisable to consider the significant risks involved. A major risk is that the U.S. government might adopt China's stringent approach and ban the trading and mining of Bitcoin. This would threaten the government's control over the money supply and make the cryptocurrency a rival of the Federal Reserve. Another risk could arise from tax measures. If the U.S. tax authority increases the capital gains tax on Bitcoin investments, this could dampen investor interest. Nevertheless, Bitcoin has already gained political support and is increasingly accepted on Wall Street, as evidenced by the approval of Bitcoin ETFs. Technological risks are also a concern. Despite the simple software design, updates could potentially cause challenging technical problems. Additionally, there are emerging concerns regarding advances in quantum computing technology, which could undermine Bitcoin's security. Scalability poses another challenge. While Visa can process thousands of transactions per second, Bitcoin handles just seven. The further development of the Lightning Network might offer a solution, but its success is uncertain. This means that Bitcoin may function more as a store of value rather than as a future means of payment. Despite its outstanding performance compared to the stock market, Bitcoin remains a volatile investment. Investors should remain flexible and willing to stay calm even during significant price fluctuations. Before investing in Bitcoin, it is worthwhile to consider alternative stocks that experts deem promising.