Investing in cryptocurrencies has become quite a trend these days! For years now, investors have been inclined towards the path of blockchain due to the high gains and the secure pathways it offers. Every latest technology involves some factor of risk as well as some rewards. And that is what we are here to discuss with you. Involving digital assets Bitcoin, Ethereum, and Dogecoin, crypto has proven to be a benchmark in the circle of finances and business management.
So what are the benefits of investing in crypto?
Perhaps the most significant and vital reason why investors are interested in cryptocurrency is the high return rate. It has been estimated that over the past few decades, the valuation of Bitcoins has increased from just a few cents to as high as $60,000.
Similar trends of growth have been observed in the popularization of cryptocurrency as well. Investors are taking great interest in earning profit from the Bitcoins and digital assets acquired through the platform of blockchain. It is the technique of decentralization that makes cryptocurrency much in demand.
Not run by a simple organization or governing body but distributed over different units and entities, this is a major contributing factor in the rise of crypto.
What are the potential risks of investing in cryptocurrency?
Despite all the benefits and cons associated with crypto, we cannot rule out the cons that come hand in hand. With such a new digital transaction system, the users will indeed face a certain amount of resistance and issues in handling the platform.
Market volatility is one of the most scary and daunting factors that can impact the profit scale. Having fluctuating market values, cryptocurrency poses variable valuation of assets which are subjected to frequent rise and fall over a short period.
We can rule out the prospect of fraud and scams which can be equally associated with crypto. The security system is not similar to the traditional financial realm and hence this is what makes it prone to cyberattacks and hackers. Fake cryptocurrency exchanges or Ponzi scams are pretty common here.
The government and regulatory bodies do not have much control over cryptocurrency making them further viable to attack. If the market shares fall then the investors may lose everything without the intervention of the government or any assistance being provided to them.
Drawbacks of cryptocurrency explained
- Volatility: If you are buying Bitcoin or any other cryptocurrency of crypto then you have to know that the price of each of these entities is completely volatile. Sometimes the valuation can be pretty high while sometimes it can be completely reduced. Depending on the trend of valuation, you can determine whether it is the ideal time to invest in cryptocurrency or not.
- Uncertainty associated with regulation- This is to be noted that regulation of government procedures is pretty flexible when it comes to crypto! The laws and regulations are subjected to changes and alterations which can affect the existing investors.
- Security policies and attacks by hackers- Any internet-based digital financial movement will certainly be prone to attack of the hackers. While some trading platforms can be secure, there can be many that are not secured similarly. Researching before investing is the best thing to do.
- Technical abnormalities- As we know, there can be two storage pathways for cryptocurrency, these include, private in a non-custodial wallet or personal apps on phones and PCs. Cold storage wallets and third-party custodians can also be involved. In personal storage, you are completely and solely responsible for the security of your wealth and assets.
Consider the benefits now
- Independence and accessibility- The primary motive of cryptocurrency is to decentralize the system of money transfer without a single governing body dominating the administration. Hence several bodies and units are involved in managing the assets in blockchains.
- Scope of accessibility The best thing about cryptocurrency is that it is easily accessible to everyone with a steady internet connection and general verifying documents. This way you can form a crypto wallet and invest as and when you wish to.
- Faster transactions and hassle-free process: With just two parties involved in the process of transactions and digital money transfers like cryptocurrency. The time of transfer is comparatively reduced without the unnecessary involvement of the third party. Plus, the processing fees that are involved in these sorts of transactions are comparatively lower than the traditional money transfer.
- Acquires mainstream support- Several mainstream organizations are investing in crypto as the system of blockchain money transfer is gaining popularity every day. However, it shall still need some time to run parallel to a 300+ year-old traditional money transfer. However, cryptocurrency is making the necessary progress to move ahead of its infancy stage and acquire similar.
