Business, Finance, Investment Blog

Why Should You Invest in CryptoCurrency

bitcoin, cryptocurrency, currency

Investing in Cryptocurrencies

Investments are risky endeavors because they are hinged on the hope that things will change for the better in the future. investing in cryptocurrency is a riskier investment choice but still one of the hottest commodities to invest. It is good to note that the higher the risk of an investment, the higher the possible returns and the higher the possible loss if the investment backfires. 

Before buying cryptocurrencies, investors should know that they are unstable because they don’t have a fixed value. The value of cryptocurrencies swings with value going up and down, and you will never be sure what the next minute has in store. Some cryptocurrencies can be hot today, but no one knows what tomorrow holds with the realization that cryptocurrencies have many unknowns, and the decision to invest should be well informed.

Benefits and Risks of Investing Cryptocurrencies

Getting filthy rich by investing in cryptocurrencies may be possible, but you can lose all your money in the same breath. Crypto investment is risky but with great profit potential.

Here are some of the benefits and risks of investing in cryptocurrencies;

Potential for High Returns

The cryptocurrency market is prone to significant volatility caused by the speculative interests of investors. The price of cryptocurrencies such as Bitcoin experience dramatic swings. The volatile nature makes cryptocurrencies exiting because the intraday price changes mean opportunities to make profits.

Market Accessibility

The Cryptocurrency market is open and operational 24/7 because they lack a central government such as central banks. Transactions are effected directly between individuals on cryptocurrency exchanges which means there are no hindrances to trading once prices shift.

The juggle between Short and Long

Buying cryptocurrencies means that the investor speculates a potential increase in value. Trading on the value of cryptocurrencies means that an investor can exploit markets whose price is falling or rising to make profits.

Financial Stability

For most investors, especially those based in the US, cryptocurrency is a volatile investment.  The US dollar is the reserve currency and one of the most stable currencies, but for some countries that suffer inflation from time to time, cryptocurrency is stable than their local currency. For investors in countries with unstable economies such as Zimbabwe, cryptocurrency investments are a savior.

Individual Ownership and Independence

Holding money using traditional banking or the credit card system makes investors lose control of their funds to a third party. The bank of the card issues exercises control over the amount you hold and can even block you without notice. Cryptocurrencies warrant investors the power to control their wallets without interference from third parties.

Every investment comes with Risks & Rewards, here are the Risks of Cryptocurrency Investments.

High Volatility

Cryptocurrencies are highly volatile, which can result in huge losses in a case where the value declines. If an investor bought Bitcoin yesterday and the price drops today, it would mean an unrecoverable loss.

Absence of Regulation

Cryptocurrencies lack official oversight or regulation by the local governments, making them vulnerable to exploitation by criminals.  The prevalence of criminal exploitation is why central banks, among other regulatory bodies, wish to get involved.

Poor Store of Value

Other than countries prone to inflation due to weak economies, nations with stable currencies such as the USA holding cryptocurrencies might lead to losses. Losses occur when the value of the token declines to a value lower than its worth at the time of purchase.

Cannot Recover Lost Cryptocurrencies

Cryptocurrencies exist in digital form only and are stored in digital wallets, accessible using private keys.  Traditional currencies in banks can be retrieved suppose the account has issues. Cryptocurrency users do not enjoy such a benefit because there is no central governance. Losing the private access key mean losing the cryptocurrencies you hold because there is no mechanism to recover lost cryptocurrency coins.

Difficult to Understand

The concept of decentralized finance (DeFi), where money is stored using blockchain technology, its hard to be understood by most people. A modern-day investor will find it hard to understand how the technology works and might not trust it.

Conclusion

Still, wondering if a cryptocurrency investment is worth your time and effort? Check on the benefits and the risks to make an informed decision.  If you feel that benefits outweigh risks, venture into it!

Share on facebook
Share on twitter
Share on linkedin

Related Articles

Reverse mortgage
Investment
efinancezone

Reverse Mortgage

REVERSE MORTGAGE: HOW DOES IT WORK A reverse mortgage is a loan utilized by homeowners 62 years of age and above, having considerable equity on their homes. This loan amount

Read More »
Travel Insurance
Business
efinancezone

Best Travel Insurance

 BEST TRAVEL INSURANCE Globalization has made businesses operate in more than one country, which means that employees and business owners are now traveling more than ever before. Medical advancements in

Read More »
Best Life Insurance
Business
efinancezone

Best Life Insurance

BEST LIFE INSURANCE: POLICIES AND COMPANIES Life insurance is an agreement or a contract between the policy owner and the company selling the policy. The company promises to pay beneficiaries

Read More »
Populat Articles