Over the recent past, there has been a sharp increase in the popularity of cryptocurrency as an investment option. However, what they don’t know is that initial coin offerings by new crypto can be a significant gamble. Of course, there is always the potential of creating amazing returns on your investment. However, the platform also comes with considerable risks and volatility.
Whether you are considering investing huge chunks of capital or a little extra money, investing in crypto is definitely worth considering. In this article, we present a balanced debate that highlights the pros and cons linked to the digital currency initial coin offerings.
Benefits of Investing in Cryptocurrencies
You may have already heard about the recent craze relating to digital currencies like Ethereum and Bitcoin. They are considered as digital money than can be used in paying for services and goods and are not restricted by governments or geographical boundaries. Crypto also offers numerous benefits as an investment platform. Here are some of the reasons why it makes sense to invest in initial coin offerings:
Likelihood of Impressive Returns
One of the main reasons why crypto is so popular as an investment platform is the possibility of massive returns. Most digital currencies witness sharp increases in value, creating amazing returns within a very short span. With coins registering thousands in terms of percentages in the rise of prices of coins, you should definitely consider investing in crypto.
Quick Cashing Out
It is known that, compared to conventional investment options like real estate, crypto can be very risky. However, the high returns within short spans means that investors can choose to benefit from the shorter time horizon to cash out on their investments. If, for instance, you need to pay for last minute essay writing service, there are companies that allow you to pay using digital currency.
Another reason to choose crypto as your investment platform is the high liquidity is offers. On the contrary, if you choose to purchase equity in a startup or invest in real estate, to realize a profit in your investment, you would need someone to purchase your equity or for IPO to take place.
Both of these options do not give you the option to control when you can cash out on your investment. Currencies with solid networks, on the other hand, allow investors to have much more liquidity. You could choose to sell your crypto for dollars or ether as soon as you wish to. You can also use the digital currency to pay for services and goods.
Problems With Cryptocurrency
Although there are many benefits associated with crypto, some challenges exist. The most notable of these is increased volatility. Most established investors who choose to shun crypto argue that it could be next investment bubble, especially given the lack of inherent value and price volatility.
One of the most serious challenges facing those interested in crypto as an investment option is scalability. Although there has been a rapid increase in the number of coins and the people willing to embrace crypto, the figures are still dwarfed by the operations in credit and cash transactions.
Although there are numerous measures that have been adopted to enhance security, there is still the possibility that hackers can make a way with your investment. Since crypto is based on technology, they are still prone to cyberattacks.
Already, there has been evidence that this is a possibility with several initial coin offers getting breached by cybercriminals and making investors lose millions. To mitigate security concerns, there will be a need to maintain tight security infrastructure and to adopt security measures that are even better than those used by conventional banks.
Absence of Regulations
There are those who fear that the absence of a regulatory framework poses even more risk when it comes to investing in crypto. If the technology is perfected and the problems solved, crypto would make an impressive investment option. However, even then, without the regulation by federal governments, the investment platform would still be very risky. There are also some risks involved, but they are mostly logistical in nature.
Crypto presents an appealing investment option. There are benefits including high liquidity and speedy returns. However, there are challenges that ought to be considered, including security risks and lack of regulation. That said, we know that blockchain technology and cryptocurrency is here to stay.
There are too many advantages offered for investors to ignore, including transparency, decentralized systems, and enhanced flexibility. All that is required are the measures to address some of the challenges currently existing in the technology.