Investing money in stocks is one of the things that people do to gain leverage in their finances. That is why people would study the stock market and decide which company dividends would benefit them in the long run.
Investors also put a big sum of money into new projects such as start-up companies and developments. This is how cryptocurrencies started, which is why it became one of the hottest investments today. If you want to find out more about it, then you should continue reading this article.
What is cryptocurrency?
A cryptocurrency is a form of digital asset that does not have any governing entity. It uses blockchain technology that is managed by the nodes or users within the network. Each of the blocks present in the blockchain is secured due to cryptography, which prevents any counterfeiting or double-spending from happening.
The first cryptocurrency that skyrocketed in the realm of finance is Bitcoin. In 2009, the pseudonymous Satoshi Nakamoto released the coin to the public with a starting value of $0. Over the years, the price of Bitcoin (BTC) has significantly increased and is now valued at around 29,000 US Dollars. From this, more cryptocurrencies have emerged such as Dogecoin, Ethereum and other altcoins.
Is crypto investment worth it?
Based on the high values of Bitcoin, Ethereum and the like, a lot of people are now investing their money on these digital assets. But the question is: is it worth investing in cryptocurrency? To know the answer to this, here is a list of pros and cons that will show you both sides of the coin.
Pros
- Decentralised
When you say decentralised, it means that there is no central entity that controls the power. A good example of centralised entities is banks, which determine the value of money each day.
On the other hand, cryptocurrency promotes decentralisation by letting the networks of the blockchain have equal and transparent control over the assets. Moreover, the number of people who hold that crypto has a say in its value. Due to decentralisation, you also have direct access to your digital assets whereas banks let you go through a middleman first.
- A hedge against inflation
Fiat currencies are subjected to inflation whenever new papers are printed for circulation. This decreases the value of the currency while the prices of goods increase. While this is unfortunate, cryptocurrency can resist inflation since there is a limited supply of coins or tokens. This prevents inflation and the value of the crypto increases as more people get hold of it.
- Security and confidentiality
Another great thing about investing in crypto is it has good security and confidentiality. A unique alphanumeric code called hash is assigned to each block to keep all data and information in blockchains encrypted. When one is altered, that block will be voided while others remain the same and protected.
- Innovative opportunities
Cryptocurrency can be used in other things aside from investing. You can also use it to buy various items such as coffee, transportation and movie tickets. Crypto has entered the gambling scene as well and is now one of the most popular forms of entertainment since you can enjoy games in the comfort of your home.
On top of that, there are a lot of opportunities that let you earn. The best example of this is the play-to-earn crypto game category, which lets you earn cash, coins or tokens from playing! From there, you have the non-fungible tokens (NFTs) that you can trade for something of greater value.
Cons
- Highly volatile
When you plan to invest in cryptocurrency, you need to be aware that it has a highly volatile nature. This means that its prices can greatly rise or fall on each day of the week. While this can be an inconvenience, a solution to combat it is to study its trends, so you can create beneficial decisions.
- Difficult to grasp due to technicality
Cryptocurrency is not an easy topic to swallow at first glance because it has a lot of technicalities. This includes difficult terminologies that you may not have encountered before such as blockchain, exchanges and more. While this is the case, a lot of cryptocurrencies are creating easy-to-read blog articles that will help you know everything you need to know about crypto.
- Frauds and scams
Unfortunately, there are also frauds and scams present in cryptocurrencies. This is one of the discouraging factors that prevent people from investing. As such, there are now a lot of precautionary methods that are being shared within the crypto community.
How you can start investing in cryptocurrency
Now that you know the pros and cons of cryptocurrency investment, the decision is up to you if you want to try it! If you are interested in investing in digital assets, here are some tips you should keep in mind:
- Traditional brokers
Brokers extend their presence online and share with you the ways how you can buy or sell cryptocurrency. They are also the ones who post orders on multiple exchanges to save you the hassle of searching for someone selling a crypto.
- Crypto exchange platforms
Trading cryptocurrency is now easier and beginner-friendly because of the different exchange platforms you can find online. With these, you can easily find various cryptocurrencies and purchase the one you want.
- Storing your crypto in hard and soft wallets
Keep your crypto safe inside hard and soft wallets so no one can hack into your digital assets.
- Cashing out when the value of crypto is good
Study the rise and fall of the crypto market thoroughly to know when you should cash out.
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