Cryptocurrency is a digital currency that was started by a person named Satoshi Nakamoto. It is a decentralized currency that is stored in a virtual bank. Hence, there is no central bank governing it, and hence it might fall victim to hacking. However, what separates it from other currencies is that it is quite volatile.
Being volatile means that its value keeps changing rapidly as it is still in its beta phase, and people from all over the world are investing in it. Hence, its demand and supply rates are quite high.
Bitcoin was launched in 2009. In the first few years, the popularity of bitcoin was gradually increasing. But, after 2015, there was a sudden increase in its price that made it famous worldwide. After that, many countries made trading in this virtual currency legal, and the price of bitcoin continued to rise.
Bitcoin trading is done through a digital wallet. The price of bitcoin remains the same all over the world. That’s why its trading became famous worldwide. For advice on investing in legal cryptocurrency, head to savingadvice.com. There is no set time for bitcoin trading, and its value is subjected to price fluctuations. In this article, we will talk about the pros and cons of buying new currencies.
Pros
Lesser Chances Of Fraud
With cryptocurrencies, the chances of falling prey to fraudulent activities are quite less. Cryptocurrencies are governed by blockchain technology that ensures the safety of these currencies.
These currencies are stored in a digital wallet, which is highly secure. Also, you need not reflect this money in your income tax statements as well.
Decentralized
A majority of the cryptocurrencies are under the control of developers and not any bank. Since no bank has power over this currency, it is not subjected to currency depreciation and demonetization. Thus, the currency is kept free from monopoly, and no particular organization has control over the value of these coins. Hence, they are highly stable and secure.
Massive Return Potentials
A major factor that interests people to invest more in cryptocurrencies is its huge return potential. For instance, if you invest $1,000 in new cryptos in 2013 then in just seven years, you can expect that the crypto will be worth $400,000. ICOs recently have established greater returns from cryptocurrency investment in a very short period.
Liquidity
Many people purchase equity shares of startups to realize gains. While doing so, you will need to find a person who will buy that equity from you or perhaps you will have to wait either for an IPO or acquisition to occur. However, no such possibilities will control the option of cashing out investments.
Cryptocurrency investors enjoy great liquidity, and they can anytime choose to encash their investments at the hour of need. You can instantly sell out your cryptocurrencies either for dollar or ether.
Anonymity
Although the address of every transaction, hash, the name of a miner, blockchain number are all documented in ledger accounts for the public to see, the procedure of transferring assets and trading cryptocurrencies is completely anonymous. No one will know about it. Hence, it is an ideal investment option if you fear to disclose personal information online and risk your identity to theft.
Accessibility
When it comes to cryptocurrencies, there is no centralised authority to govern the transactions. Trading cryptocurrencies is possible at any hour of the day if the other user is also online. Peer-to-peer transfers conveniently happen, no matter the location of you and your pal(recipient). Platforms for trading are accessible 24*7. It doesn’t work the same as the stock exchange market, and you can choose to trade at any point in time because another person can trade overseas.
Cons
Fear Of Hacking
A ledger is created for Bitcoin transactions. Millions of merchants in the world also deal with bitcoins. However, no central bank has recognized it yet.
The biggest disadvantage of trading cryptocurrencies is that if your computer is hacked, you will not recover your money. Not only this, you cannot complain to the police or anywhere else.
Volatility
One of the most significant disadvantages of cryptocurrencies is its volatility. Although no single country or an entity is responsible for governing it, some major world events or news reports can impact the price of cryptocurrencies. If someone is looking forward to trading in low risk and expecting significant returns in the long-term, then cryptos are not for them.
Relatively New In The Industry
The concept of cryptocurrency is relatively new, and many people have a hard time trusting intangible reserves. People are unsure about how long it will last and hence, it fails to attract many investors. Also, it is tough to double spend or forge them.
Difficult to Comprehend
A challenging barrier considering large-scale adoption of several options of cryptocurrencies is that investment in cryptos is a tough subject to understand. If the investor is a non-techy, then this idea of a financial system that is decentralised will be very challenging.
It seems to be difficult to understand for some, and therefore, people are not able to obtain the benefits it offers. However, this is the hurdle that advocates of digital currency will have to tackle if they want to experience the benefits of a big screen.
The Biggest Boom Period is Over
It is very hard to accept, but it is the truth. The huge boom of the history of cryptocurrency is already over and is in the past now. Initially, Bitcoins were only worth a few pennies, and from there, it is now worth some thousand dollars.
This was the biggest hype that cryptocurrency experienced. However, this is not something that the investors will get to see again in the near future. But, that doesn’t mean you cannot expect gains from investing in cryptocurrencies.
Summary
Cryptocurrencies are highly volatile and are known to give good returns. You can consider investing in them for long term gains. However, make sure to gauge both the pros and cons involved in it.
