Nowadays, cryptocurrencies like Bitcoin, Ethereum, Litecoin, and many others are the latest trend in the world of investment. The major reason why cryptocurrencies have piqued the interest of both seasoned and starting investors is the fact that Bitcoin has quadrupled its value over the last year, spiking about a 160% increase in the fourth quarter of the year alone.
Furthermore, famous payment platforms like PayPal and Square have already started accepting payments in the form of cryptocurrencies, which provides cryptocurrency owners with another means of paying for products and services. Also, due to the rise of multiple crypto platforms, buying, selling, and trading any type of cryptocurrency has become much easier than ever before.
So, if you plan on starting your crypto-journey, you can check this article to learn the basics of investing in cryptocurrency, among other things. In addition to learning the basics, you should also consider the pros and cons of investing in this digital asset so you’ll gain relevant insights.
The Pros Of Cryptocurrency Investments
More than just the trend, there are many advantages to investing in cryptocurrency. The list below should provide you with a general overview of these benefits:
- High Potential For Huge Returns
Perhaps what attracts many people to start investing in cryptocurrencies, especially Bitcoin, is the fact that many other people have already experienced a high ROI (return on investment). To illustrate, if you’ve invested USD$1,000 in Bitcoin way back in 2013, you would have over $USD400,000 today.
You may how concerns about Bitcoin’s value dropping or the hype for cryptocurrencies fading away soon. However, various experts and analysts predict that cryptocurrencies, in general, have much further to run. Additionally, what both investors and traders should understand is that various lesser-known cryptocurrencies, like Lumen, Komodo, and Fusion, could have equal or bigger potential for future appreciation with Bitcoin, especially if these become more popular among investors.
- Can Be Accessed Anytime
Regardless of your location and time, you can transact (buy, sell, and trade) cryptocurrencies 24/7, as long as you have an internet connection.
What makes it even more convenient is that you can perform transactions using your mobile phone, especially since reliable trading platforms usually have an app available for download. Hence, unlike stock trading, you can exchange digital assets with other users at all times since someone else from another country and time zone will be available to trade with you.
- Transact Without Any Hassle
Since cryptocurrencies can be accessed anytime, it also follows that they can be done hassle-free. The process is pretty straightforward—simply click on a few buttons and confirm the transaction, usually through two-step verification.
Furthermore, since there are thousands of ‘miners’ (people who have a dedicated high-powered computer that’s responsible for processing computations), payment can be received in real-time.
- Users Have Complete Control
Cryptocurrency investors have total control over their transactions and funds, which makes the entire process safer. Additionally, only the address (a unique identifier that refers to the virtual location where the type of cryptocurrency is sent), transaction hash (a unique combination of numbers and letters given to a transaction), and block number (data that’s to be permanently recorded in the cryptocurrency network) are made public.
What does this mean for you? Since you’re not sharing your private information, like your name and physical address, transacting via cryptocurrencies is more effective in preventing identity theft and fraud, which is ideal for someone wary about giving personal details online.
The Cons of Cryptocurrency Investments
Of course, like in any opportunity, investing in cryptocurrency entails certain risks. Learn more about the cons of cryptocurrency investments below to help you make a decision if this is for you:
- Highly Volatile
Like traditional stock trading, the cryptocurrency market is also subject to price changes. In fact, some would say that cryptocurrency is much more volatile than the traditional stock market.
This being said, when investing in cryptocurrencies, it’s important to consider them as long-term investments, especially since these digital assets are still in their infancy stage. Thus, don’t let the sudden change in prices persuade you into believing that you’ve made a bad investment.
- May Be Too Technical
The whole concept of cryptocurrencies, especially on how it works, may be too technical for people who aren’t adept in technology. Because of this, people might shun away from investing in it. It’s understandable to be hesitant about using one’s hard-earned money on something they know nothing about.
Still, with sufficient time and effort to study the nitty-gritty of the cryptocurrency industry, along with the right determination, you’ll be able to gain more knowledge about this subject matter. Besides, no one was born an expert in investing, even in traditional stock trading. Instead, focus on developing skills that’ll enable you to determine the various factors that affect the prices, as well as learn how to read charts and graphs to make a wise investment decision.
- Lost Assets Cannot Be Recovered
Unlike fiat currencies where you can physically hold them, cryptocurrencies are essentially digital currencies. Hence, they have to be kept safely in a digital wallet that serves as your account, which you can access by setting up a private access key. Furthermore, since physical currencies are stored in the bank, you may be able to retrieve them in case something happens, like fraud and scams. Meanwhile, cryptocurrencies don’t rely on any central authority figure to moderate any transactions.
This means that if you’ve lost your private access key, you may lose your digital assets forever. Also, there are no programs, apps, or websites in place to help recover lost cryptocurrencies. Therefore, exercise due diligence to avoid this problem, especially if you’ve invested a large amount of money already.
Types Of Cryptocurrencies To Invest In
Other than Bitcoin, there are many types of cryptocurrencies worth looking into today. By knowing other types of cryptocurrencies, you also get to diversify your portfolio. These are some of the most promising cryptocurrencies:
- Ethereum (ETH)
- Cardano (ADA)
- Litecoin (LTC)
- Bitcoin Cash (BCH)
- Polkadot (DOT)
- Binance Coin (BNB)
- Stellar (XLM)
- Monery (XRM)
- Tether (USDT)
There are many resources available to help you learn more about these important cryptocurrencies.
TakeawayThere are pros and cons to investing in any type of cryptocurrency. This shouldn’t dissuade you from considering this investment opportunity since, in the first place, all forms of investment have their inherent risk. What’s important, however, is to conduct proper research first before delving into the world of investment, especially cryptocurrencies. Fortunately, there are plenty of sources that’ll guide you in achieving success in this highly volatile yet rewarding form of investment.