Investment is no longer a luxury that only upper-class people can enjoy. In today’s time, every person cryptocurrency investing on a frequent or continual basis. Due to the growing awareness regarding the importance of savings and investments, many people start investing in a profitable avenue as soon as they start earning.
When it comes to investment, any discussion, conversation, debate, or argument is incomplete without the mention of the word ‘cryptocurrency’. Despite being in the market for more than ten years, cryptocurrency or digital currency is still a hot topic for individuals, financial expert, government bodies, and others. The reason behind the same is the constant changes or developments taking place in the whole cryptocurrency scenario in different parts of the world.
Amidst these changes, the biggest question or the million-dollar question that people often face is this – “Should I Invest in Cryptocurrency?”. Even though many instances have been witnessed wherein people who invested in crypto earn huge amounts of profits, those who have never invested in crypto before encounter many doubts and obstacles.
In this blog post, we have tried to highlight some facts and present our views on whether cryptocurrency investing is worth it or not. We have conducted considerable research and practiced due diligence to create this blog post so that you don’t take any misunderstanding or false beliefs with you.
Table of Contents
Beginning of Cryptocurrency as an Investment Avenue
Ever since the first decentralized cryptocurrency, i.e., Bitcoin, came into existence in the year 2009, Bitcoin and all other cryptocurrencies have taken the world by storm. Even if people feel scared to invest, they still keep an eye on the latest news and events related to the crypto sector.
In the beginning, not many people were aware that investment could be made in cryptocurrency, but once the stories started coming out of early investors who get benefited by the increase in the price of different cryptocurrencies, more and more people rushed to invest in teck so as not to be left out. This trend soared even more upwards as some famous personalities invested in digital currencies too.
However, a large number of people still feel scared of putting their money in the basket of digital currencies. The major reason behind the same is that cryptocurrencies are not regulated or controlled by governments. Therefore, virtual currencies are not considered a safe or secured option for investment.
Investing in Cryptocurrency is Profitable But…
Just like the stock market, the crypto market also has some inherent risks. Upward and downward trends are seen in the crypto industry as well. The price of bitcoin and other virtual currencies can move up and down depending on the demand and supply as well as other factors. But it cannot be ignored that investing in virtual currencies has proven to bring fortunes to many people.
So, if investors adopt a prudent approach, they can definitely earn profits. They have to stay informed of all the updates regarding the crypto market. The timing of entering and exiting the market, i.e., buying and selling the cryptocurrency, also matters a lot.
Now you must be wondering why we have used the word ‘But’ in the heading. The reason is that, just like many other financial matters, gaining profits from cryptocurrencies is also conditional. As we have described in the above two paragraphs, you need to create your investment strategy smartly by studying the market. If you feel you might be lacking somewhere, there is nothing wrong with seeking the advice of experts.
What Can Lead to Loss in Cryptocurrency Market?
New cryptocurrencies are being launched frequently, and so, competition between all the cryptocurrencies exists. From them, many are launched just to dethrone other cryptocurrencies that are doing well in the market. As a result, it’s quite difficult to predict what might happen in the future. The cryptocurrency that looks promising before and at the time of launch might crash down immediately or a while after the launch.
Experts in the industry claim that only a few cryptocurrencies will eventually become a rewarding avenue of investment. So, investors making the wrong decision can end up incurring heavy losses. Another reason why someone can incur a loss by investing in cryptocurrency is the vulnerability of cryptocurrencies exchanges to cyberattacks.
As cybercriminals can attack cryptocurrency exchanges, investors face a terrible risk. Their virtual currency can get stolen by these criminals. Offline cold storage options for digital currencies are also a hassle to use. The risk that you cannot ignore for long when it comes to determining the suitability of an investment in cryptocurrencies is the framework made by the government.
It’s not a hidden fact that governments of many countries have shown their disregard and disapproval regarding digital currencies. As an investor, you will always have to live under the fear that the government can formulate different rules, regulations, policies, and guidelines surrounding cryptocurrencies. There is no guarantee that these rules will always be in favor of investors. However, exceptions always exist. The central bank of Sweden has launched eKrona, a digital currency, which has captured the interest of many people around the world.
Long-Term Scope for Investment in Cryptocurrency
Whenever any avenue for investment comes into the picture or limelight, the biggest question that comes to the mind of potential investors and financial experts is regarding its scope for becoming a profitable long-term investment. Similar questions have been raised about cryptocurrency or digital currency as well.
Well, many investors have placed their bets on Bitcoin, Ethereum, and other digital currencies with the hope and belief that their price will increase enough to provide them with sufficient returns in the long run. This belief has been proved correct on several different occasions.
However, a sudden crash in the prices of virtual currencies is also not an unfamiliar situation. Whenever any major news or announcement becomes public, a significant change has been observed in the price of various digital currencies, especially those that are quite popular.
But that doesn’t negate the fact that there is a huge chance of cryptocurrency being considered a wonderful long-term investment option by all, provided certain conditions are fulfilled. For example, when more and more investors choose cryptocurrencies, their prices are bound to increase. Thus, investors can get handsome returns on their money.
Just like every other type of investment, cryptocurrency investment also comes with risks. You should carry out proper research and acquire the necessary knowledge before putting your hard-earned money into any form of investment.