Cryptocurrency has certainly caused a buzz in the investment world recently. Since the emergence of Bitcoin, we’ve seen its worth go from mere pennies to thousands of dollars!
This has led to the arrival of many more cryptocurrencies on the market, with investors jumping at the chance to capitalize on this highly profitable asset. But as with any investment, it is not without its risks.
So if you’ve been looking for that next big investment you may have asked yourself, “Should I invest in cryptocurrency?” Well, you’re in the right place. This article outlays the various cryptocurrencies available along with the pros and cons to help you decide if it’s for you.
What Exactly Is Cryptocurrency?
A cryptocurrency is a digital form of currency that can be used and exchanged in online transactions. Think of it as digital money only better. It is secured and verified with cryptography to prevent counterfeiting and it has no central authority such as government or banks.
Instead, it is facilitated by blockchain technology operating on a peer-to-peer network. This means that they cannot be affected by any manipulation or interference from central authorities. Transactions are anonymous and secure, making it an ideal way to pay for goods and services.
Types of Cryptocurrency
Bitcoin is the original cryptocurrency that set out to become the first peer-to-peer digital currency, detached from centralized regulation. With a bumpy start, it has grown to be the most popular and investable form.
Since then, others have joined the party and they too are becoming more pronounced. They include Litecoin, Ethereum, Basic Attention Token (BAT), Ripple, Stellar, NEO, and Cardano, being among the most popular. However, more are revealed all the time, and all of them are subject to change.
The Pros and Cons of Investing in Cryptocurrency
There has been a lot of stable growth with cryptocurrency, as many of our purchases move towards being digital rather than cash. The more we hear about it and use it, the more popular it becomes as it emerges into a revolutionary way to view money.
With all the hype around it, everyone’s looking to get on board with crypto to start reigning in those big returns. And while it can be incredibly lucrative, as with many investments, they come with an element of risk. So before you get too excited, let’s start with a look at some of the cons.
Con 1 – It Can be Hard to Understand
Because a decentralized digital financial system is relatively new, many people don’t know it exists, let alone understand its complex nature. Because of this, people are reluctant to take the plunge and are cautious about its benefits. It can require a lot of research to know exactly what you’re doing.
Con 2 – A Very Volatile Market
Cryptocurrency values are fluctuating all the time as they’re more widely used for investment purposes as opposed to spending. This brings about the instability that is hard to keep up with and many have lost a lot of money throwing all their savings into it.
Con 3 – Not Entirely Secure
Even though it is encrypted, crypto is not immune to hackers and scam artists. There have been cases where people have had Bitcoins stolen from their wallet (digital crypto account) as they were posing as legitimate. So, make sure to do your research well and choose a credible wallet that is fully secure and reviewed.
Con 4 – Missed the Boom
Cryptocurrency investments can still be very lucrative, but it has now become more mainstream and there’s lots more to choose from these days. So while Bitcoin has brought huge returns to early investors, it’s unlikely to do the same any time soon.
Pro 1 – You Can Get Started Right Away
You don’t have to have a lot of money or experience to invest in crypto. While Bitcoins are worth a few thousand each, you can buy fractions of them for much less. Plus, there are many platforms and apps like eToro, where you can learn what you need to know and trade with other new investors through shared tips.
Pro 2 – Returns Can Be Big
When you compare cryptocurrency investing to something like stocks or mutual funds, the potential returns are much bigger. Of course, it comes with more risk, but if you play the game wisely, invest carefully, and learn from the experts, there are huge profits to be made.
Pro 3 – More Liquidity
With other investments, it can take some time before you are able to cash out and access your money. But cryptocurrencies are very liquid, meaning you can get access to it very quickly. And you don’t even have to make and wait for withdrawals as you can trade and pay for things with it. Even brand retailers are starting to accept Bitcoins now.
Pro 4 – Complete Anonymity
If you worry about handing over your personal data online, cryptocurrency allows you to make completely anonymous transactions. While this makes for better security against thieves and protects your identity, criminals can also use it on the black market. So there’s a little con to this one too.
Should I Invest in Cryptocurrency?
By now you should be a little more aware of what cryptocurrency is and how it’s used. Hopefully, these pros and cons will give you that extra bit of insight to help you answer that question, “Should I invest in cryptocurrency?”
Ultimately, it all comes down to how you feel about investing in riskier strategies and what you’re willing to do to maximize your returns. As with any money-making opportunity, it is never easy and takes a fair bit of work to get it right. Otherwise, everyone would be doing it!
So if you are looking to invest in cryptocurrency, first take the time to learn more about it and learn from those doing it already. Use the available platforms and learn from other people’s strategies to determine what’s best for you. In time you could have a very profitable portfolio on your hands.
If you want more great advice on finances and investments, be sure to check out the latest in our blog today!