Aside from putting money in stocks or insurance, people are moving towards cryptocurrency as a long-term investment option. Digital assets have caught the attention of various investors and companies due to its efficient and decentralized means of trading that allows faster and more accessible transactions in comparison to fiat and other traditional systems.
However, for beginners like you, it can be hard to determine whether investing in this fast-paced market is the best avenue for your hard-earned funds. Get to know the crypto investment pros/cons and decide if you want to take the plunge and start trading crypto coins right here at BTC Post!
Pros of investing in cryptocurrency
Understanding crypto and its advantages will help you learn more about the industry and get an edge in the market. If you are thinking of investing in crypto, take a look at some of the pros:
Cryptocurrency is a great option for investing your money
Buying and trading crypto coins is a great option for investing because although the market is volatile, it gives people more control and independence over their money. Not only is crypto convenient and easier to use than fiat, but its current performance in the market presents a good potential to earn profits compared to regular stocks.
Cryptocurrency transactions are decentralized
Another advantage of investing in cryptocurrency is its decentralized nature, meaning no central authority or institution can tamper with the value and supply of the digital assets.
In cryptocurrency’s protocol, transactions are validated by nodes in a peer-to-peer network of computers by reaching a consensus to prove its legitimacy. It is then recorded on the blockchain, a public ledger of transactions that is accessible to anyone.
Investing in cryptocurrency allows for privacy and anonymity
Even though the blockchain is public, the details of the transactions including the identity of the two parties involved remain private and anonymous. The only information stored in the blockchain includes the timestamps of when the transactions occurred, amount transferred, public addresses of both parties, as well as the hash of the block and the one before it.
Traders no longer have to give personal details just to conduct transactions online, preventing them from fraud and identity theft.
Crypto investment offers accessibility
With cryptocurrency, traders are able to complete transactions whenever and wherever they want, unlike in centralized institutions such as banks that have designated office hours. The only thing users need is a crypto wallet, device, and internet connection.
Moreover, cross-border transactions with cryptocurrency don’t involve red tapes, bureaucracy and laborious processes that can take a few business days to be completed.
This means that traders have full control over their money. They can access the funds at any time and place and transfer any amount to anyone in the world.
Cryptocurrency enables fast transactions
Crypto transactions can be completed within a matter of minutes. All you need to do is access your crypto wallet, make the exchange you want, and that’s it! You won’t have to worry about waiting a few days before sending or receiving coins.
This is a huge advantage compared to banks and other financial institutions that can take days before the transaction is completed.
Cryptocurrency offers various ways to invest
Some of the popular ways to invest in cryptocurrency includes HODLing and day trading. HODLing means holding onto your crypto coins for the long-term and waiting until their value increases over time before selling. On the other hand, day trading involves short-term trading, wherein buying and selling coins according to the market’s movement within a day to make a quick profit.
Cons of investing in cryptocurrency
Cryptocurrency can be hard to understand
Since people are used to the traditional means of investing such as buying stocks or insurance, they tend to be closed off on other ideas. So when the first cryptocurrency was released back in 2009, people weren’t sure if it was safe to use as a medium of exchange or not.
Today, the crypto market continues to grow with more than 5,000 different cryptocurrencies circling the market. However, people are still sceptical due to the novelty and ever-changing nature of the industry. Learning about the technology, processes, and risks of investing in crypto can be hard for some people, especially for those who aren’t technologically-adept.
The cryptocurrency market is volatile
Just like other types of investment, the value of cryptocurrencies fluctuates depending on public demand, except that crypto’s market is more volatile and can be unpredictable. However, you can still manage your funds strategically by tracking the market’s movement and monitoring performance indicators in crypto investment sites like Kubera and CoinMarketCap.
When investing in crypto, it’s important to always keep an open mind and understand that all investment markets are subject to change and cryptocurrencies are no exception.
It can be extremely difficult or even impossible to retrieve lost crypto coins.
Although cryptocurrencies’ underlying technology which is the blockchain is tamper-proof and unhackable, other crypto platforms such as exchange sites and wallets can still be susceptible to hacks and malware. There are also scammers that trick first-time crypto investors with coin offerings or pyramid schemes. You can also lose your coins simply by forgetting the password of your crypto wallet or losing your hardware wallet.
If you lose your money, there’s an extremely low chance that you can get it back since there will be no central authority to come after these cybercriminals nor a customer service that can help you retrieve your lost passwords or devices.
Investing in new crypto coins can be risky
Before shelling out money for crypto coins, especially new ones, you need to do your research first. Study the whitepaper of the coin and everything it has to offer. Not all cryptocurrencies are legitimate or can perform well in the market so you may end up wasting your money if you’re not careful.
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Ethereum (ETH) $ 3,371.16 3.21%
Cardano (ADA) $ 2.36 1.56%
Tether (USDT) $ 1.00 0.13%
Binance Coin (BNB) $ 411.57 1.21%
XRP (XRP) $ 1.07 1.62%
Solana (SOL) $ 160.75 0.77%
Polkadot (DOT) $ 33.97 4.29%
Dogecoin (DOGE) $ 0.239014 1.66%
USD Coin (USDC) $ 1.00 0.46%