The Pros and Cons of Investing in Cryptocurrency
It’s hard to ignore the prevalence of cryptocurrency in our lives today. It’s estimated the industry will be worth over $1 trillion as we head into 2019, which means, it’s time to consider the value and profitability of investing in this new kind of digital token.
Of course, as something so new, investing in cryptocurrency comes with both pros and cons that we want you to be aware of – it is, after all, your money you are going to be investing.
Here is our list of the top pros and cons of cryptocurrency investment:
- The Upside Potential: One of the major crypto investment benefits is that the upside potential is astronomical. Thus far, Bitcoin peaked to almost $20,000 per coin before a recent decline. Given that the coin only started trading in 2016, that’s a massive jump for such a new currency. And yes, although it is enduring a decline, many economists believe the decline is short-lived, with an even higher peak around the corner.
- Total Transparency: Arguably the biggest benefit of working with blockchain technology is that it’s entirely transparent – it belongs to no one and no government. All transactions are measured on a public ledger, which means investors are able to see and review everything they want before saying yes to the investment.
- Liquidity Ease: Liquidity, otherwise known as the process by which you can turn assets into liquid cash, is a hugely important part of investment. How quickly can you get your money? Well, given the marketplaces that surround every crypto coin, like Bitstamp, Binfinex, Kraken, Coinbase, and others, it’s easier than ever before to turn these coins into tangible money when you decide the time is right.
- ICO Falsehoods: Naturally, with something so hugely popular so quickly, there is also a lot we don’t know about this new world. When a new crypto coin is introduced, it goes through an Initial Coin Offering, backed by a startup. Well, not everyone in these startups have good intentions, which is why you want to really do your research before you back an ICO.
- Uncertainty: As we have seen, the value of Bitcoin has peaked and plummeted astronomically over just a 3-year period. It has very high volatility as a commodity so new in our world, which is something you want to keep in mind if you are looking for a more stable and reliable payoff.
- Security Breaches: Although blockchain technology is immutable, we are still in a completely new era of virtual currencies, meaning it’s the “wild, wild west.” Cybercriminals are trying to figure out how to penetrate these new networks, which is something you should keep in mind if you’re considering going “all-in.”
As you can see, there are several advantages and disadvantages of placing your dollars behind cryptocurrencies. As such a new market, the payoff potential is huge – unlike anything we have seen before. But, that means the loss potential is just as big. Tread with caution.