This third post, an extension of the previous two, dedicated to the dangers and opportunities that bitcoin offers us, wants to approach new forms of investment or payment, such as bitcoin today.

          What is bitcoin? In a simple way we can define bitcoin as a cryptocurrency that allows anonymous transactions without the need for approval by a Central Bank, Central Authority or sole administrator.

          What regulations regulate bitcoin in Spain? The truth is that in our country, from my point of view, bitcoin acquirers are not sure whether it is an investment, a kind of game or if it is ultimately a virtual currency.

          What happens to companies that sell bitcoins? In Spain, the existing gap in terms of product type and its regulatory regulations do not exempt operators from the existing regulations, especially those for the creation of companies registered to operate in this area and consumer protection.

          On the other hand, that there is no specific regulation on bitcoins (or any other cryptocurrency) is one thing, and quite another is that the protective regulations of consumers and users are not complied with. Let us remember that our country has regulations that oblige the entrepreneur (trading company) to inform the purchaser of the risks that he assumes when acquiring a specific product.

          What risks do I assume if I acquire bitcoins or another cryptocurrency? The reality is that the universe of cryptocurrencies hides multiple risks, namely:

         i) Volatility: Currently the price of bitcoin has fallen sharply, the question is whether we are facing an impulsive and unthinking market or this volatility is due to its limited supply and the absence of a central bank that can intervene in this market .

          ii) Scams: The use of bitcoins, increasingly widespread among investors, has led to scams that target these currencies have also spread. So a bitcoin investor should pay special attention to; fake exchange houses; fake cryptocurrencies; free cryptocurrencies; benders, etc.

          iii) Ponzi schemes. It is important to act with caution and prudence and not trust investments that offer dizzying and exorbitant returns. A ponzi scheme is quite similar to a cryptocurrency pyramid scam in which, with subterfuges or investment-clad justifications, third parties are offered to invest their money by assuring or guaranteeing them succulent benefits, with the chimera of significant profits in a short space of time.

          iv) Risks to the environment. If there are two individuals that have emerged in recent times in the markets and that have especially influenced the new generations of investors, those are cryptocurrencies and the investment boom with environmental criteria. In line with what has been stated, bitcoin is in some danger in this regard, especially if we take into account the notable increase in energy consumption in bitcoin mining and transaction processes.

          Is bitcoin a safe haven like gold is? In my opinion, the fact that a single tweet was enough to explode the time bubble associated with bitcoin with the consequent bleeding should make us reflect, especially if a simple tweet can generate this earthquake.

          Within the framework of what was stated in the preceding paragraph, something that we can call a cryptocurrency or medium of exchange that fluctuates so violently cannot be a safe haven due to volatility, in fact, how could bitcoin protect us against inflation?

          So is it risky to buy bitcoins? From my point of view it is risky, it is a speculative investment in which we get rid of real money, which has the backing of a Central Bank to acquire one virtual currency that lacks any backing. On the other hand, let’s not forget that there are no guarantees, in fact investors who invest in this product should consider the possibility of a significant loss of their money.

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