If you have money to spare and have already looked for opportunities to invest, it’s highly likely that you’ve already come across Bitcoin, Ethereum, or digital currencies in general. Digital currencies have reached a state where the asset is famous for being a great and risky addition to an investor’s portfolio, especially for many retail and institutional investors.
If you’re a financially savvy person, the blooming market of cryptocurrencies might have piqued your interest. But just like any other investment asset, there are advantages and disadvantages to consider when investing in crypto. Most users start their investment by trading on platforms with support by experts and easy-to-use software like Bitcoin Evolution. In this article, we’ll take on digital currencies and all of the advantages and disadvantages that come along with them.
The Pros Of Crypto Investment
As you finally decide on investing in digital currencies, there are still some things to consider before doing so. And those are knowing and understanding the advantages and disadvantages of crypto. This section will help you clear some or most of your doubts about digital currencies, and let’s first start with crypto’s advantages to understand why more and more people are turning to crypto to make money.
- No Scam In Crypto
One of the advantages of crypto, and it’s one of the best reasons why people sought crypto for financial stability, is that no fraud or scam can happen in crypto investment. Unlike other payment methods such as credit cards, gift cards, or online banking, cryptocurrency payments can’t be declined as the receiver will acquire the funds in just a few seconds. Additionally, due to how blockchain works, crypto can be as secure as it can be; thus, no manipulation of data can ever occur because of its digital security.
If you’re still using traditional means to pay for goods and services, such as using a credit card, there’s a possibility that your information will get leaked out as you would need to provide the code of your card to the merchant to continue with the transaction. Digital currencies, on the other hand, you don’t need to share with anyone your private key as every transaction you make with crypto will be 100% encrypted. With that in mind, no other entity or third party can access your crucial information, thus making crypto’s anonymity makes it the best choice.
- Crypto Ownership Transfers are Secure
In general, if you have a digital currency asset in your crypto wallet, then it’s considered that you have a big asset at your disposal as you can easily transfer the funds to anyone without any third-party entity overlooking the transaction, similar to how governments and banks work. When it comes to transferring the ownership of a digital currency asset, no fee is required compared to how property transfer or bank closures work, which requires you to finish massive paperwork and pay a hefty commission fee.
The Cons of Crypto Investment
Now that you’ve read our top 3 advantages with cryptocurrency investments and have already made plans to invest in them, there’s still something you need to consider, and it’s the most important of them all, and those are the disadvantages involved with the crypto investment. Getting familiar with the cons involved can help you make educated decisions towards your journey into financial stability.
- The Risk Of Losing it All Is High
One of the disadvantages that crypto has is the potential to lose all of your investments. The fact that there is no centralised authority that overlooks digital currencies is the reason why there’s a big risk involved when investing with them. For instance, if something happens to the crypto wallet where you stored your crypto funds, there’s no other entity that can help you. Because crypto is unregulated, exchange platforms and wallets are not obligated to provide insurance to your crypto funds. With that in mind, if something bad happens to where you store your digital currencies, there’s no going back from there.
- The High Volatility Rate
Another thing to keep when investing in digital currencies is how extremely volatile its market is; at one moment, the market value of cryptos would skyrocket only to dwindle down unexpectedly the next day. With that in mind, the high volatility rate of digital currencies is one of the reasons why it’s relatively impossible to predict when is the best time to buy or sell a digital currency asset. To be successful in your crypto investment, you need to analyse and research the market thoroughly so that you’ll be prepared for any kind of situation.
- The Potential To Use Crypto Illegally
With digital currencies, you have the benefit to become anonymous with any crypto-related transactions you make; however, it could potentially be used to purchase goods and services that are illegal. With that in mind, criminals can use crypto as a means of payment for any illegal transaction as their personal information will never be disclosed; thus, no government entity can ban them as there is no centralised authority over it. At best, governments can add restrictions and regulations but cannot completely ban the use of digital currencies.
Should You Invest In Crypto?
Compared to other forms of investment assets and commodities, digital currencies are considered to be the riskiest choice; however, there’s a possibility to gain significant returns with your investment if you play your cards right. With that in mind, it’s essential for you to comprehend that you should only invest in crypto with what you can afford to lose. Regardless, as long as you can handle the risks involved with investing in cryptocurrencies, there’s no stopping you from investing in them.
Now that we’ve taken on digital currencies and all the pros and cons that come along with them, you have to ensure that you will be careful whenever you invest or trade with cryptocurrencies. Regardless, before you dive into any kind of investment, especially cryptos, it’s highly recommended that you should first build an emergency fund if ever your investment goes south, as well as determine your tolerance of the risks involved before jumping into it. You have to remember that it’s important to have some sort of financial cushion to fall back on and to gain the necessary knowledge of what you’re investing in.