The chances are good that even if you don’t know what cryptocurrencies are, you’ve heard of them. The largest and most well-known cryptocurrency is bitcoin. By definition, cryptocurrency is a pretty simple concept. Crypto stands for something secret/hidden. Currency is simply a monetary system. Cryptocurrency allows users to store their money without it going through a bank or the need for their name.
Their money can be used to buy goods and services online. The main issue with investing in cryptocurrencies is their worth in real currency fluctuates so much. You could invest and end up making money or you could suffer a massive loss. This article will offer some insight as to whether it is worthwhile investing in cryptocurrency.
A Note of Safety
When you consider investing your hard-earned cash, it is important to look at whether or not it will be safe. Given the anonymity of cryptocurrencies and the lack of regulation that you get with non-traditional money, it’s no surprise that crypto exchanges are prone to hacks and other criminal activity. If you have your currency stolen, then there isn’t much you can do about that. This being said, there are things you can do to buy and sell cryptocurrency safely.
Cryptocurrency is still a relatively new system in the grand scheme of things. When you invest your money through an exchange like Coinbase, the process is very easy but storing your assets on an exchange leaves it vulnerable to cyber-attacks mentioned earlier. People prefer to keep their assets offline, in crypto wallets that require a digital key to access. This comes with its own set of problems because it can be too safe – if you lose your key there is no way to recover your investment.
Already, there are a lot of complications that come with investing your money in cryptocurrencies.
Long Term Gain
At this point, it’s quite difficult to determine whether your investment will pay off in the long run because not enough time has passed. The only way your assets will pay off is if the currency is adopted on a wide scale.
Generally, people are split between two trains of thought. Let’s take bitcoin as an example. Currently, it has a maximum supply of 21 million coins and is, therefore, viewed by some as a scarce asset. However, there is a chance that it could increase in value as traditional currencies depreciate. Others, on the other hand, believe that bitcoin will eventually gain widescale use as digital currency – that it will become the first worldwide currency. The fact that all of this is based on guesswork and hopefulness makes it extremely difficult to make a guarantee that investing in bitcoin will generate a return.
The Big Question
So, now that we have some more information, it’s time to decide whether cryptocurrencies are worthwhile investments. Unfortunately, the direct answer is that no one can offer you a guarantee either way. All you can do at this point is to weigh up what knowledge we do have against more traditional investment methods – you can either take a leap of faith or play it safe.