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The dangers of bitcoin

All investments involve a certain level of risk, and there is no getting around it. But the risk of buying a digital currency like Bitcoin far exceeds the risk of investing money in an established quality stock.

For one thing, Bitcoin has been around longer than other digital currencies, but much less time than many of the companies that trade on the stock exchange today. And while stocks experience their share of price fluctuations, Bitcoin has seen some even more intense fluctuations.

But there are other risks associated with Bitcoin. For one thing, we don’t know if it will become a widely accepted currency. If it doesn’t, then demand is likely to fall. And if the demand for Bitcoin falls, so will its value.

Also, we don’t know what regulatory issues could arise for Bitcoin and other digital currencies. Until there is more clarity on this front, it remains a risky prospect.

All of that risk doesn’t necessarily make Bitcoin a bad investment choice. But is it a wise retirement investment? Probably not.

Since Bitcoin has only been around for 12 years, there is no way of predicting whether it and other cryptocurrencies will trade two, three or four decades later. And when you are many years away from retirement, that is a worrying thought.