What started as a math experiment has now turned into a global phenomenon called ‘Cryptocurrency.’
When Satoshi Nakamoto was mining the currency, maybe he was unsure about what hype this currency is going to get. In fact, after the official launch by the bitcoin team in 2011, a single bitcoin was valued at $0.8 per bitcoin. A person could have bought around 12 bitcoins for a single dollar. Fast forward 11 years, and one bitcoin is now valued at $9,000+.
Later in 2014, more cryptocurrencies emerged. Almost all of these were developed using various encryption methods such as hashing, formula solving, puzzle finds, and many others. And that’s how these currencies were named as cryptocurrencies. Today, there are more than 1000 cryptocurrencies available in the market.
Even countries like the US, Canada, UK, Australia, and many other first world countries have started accepting cryptocurrencies as Money Business Service (MBS), allowing their citizens to trade in these currencies and use them as investments openly.
Let’s learn how cryptocurrencies differ from other currencies; what benefits they offer to investors; and, what are the risks investors should know before investing?
Read More: Facebook Announces Calibra, A Digital Wallet For Its Libra Cryptocurrency
Benefits of Investing In Cryptocurrencies
Everyone with money wants to double it. Cryptocurrencies offer a lucrative opportunity to users who would like to invest safely in the long-term. In the past few years, most cryptocurrencies have experienced increased demand that has increased their value by 4X.
- Has a Higher Profit Potential
As we were saying, cryptocurrencies have a very high-profit margin. You can trade in these cryptocurrencies by opening an account with a cryptocurrency exchange. Like you would do in the forex and the stock market. However, the fluctuations are much more predictable and comparatively lower than stocks and forex combined.
- Cryptocurrency is Impossible to Counterfeit
The significant benefit of cryptocurrencies is that they are impossible to copy. No one can create a replica of a bitcoin because they are generated in blocks through crypto mining. The same is the process of minting other cryptocurrencies.
Some cryptocurrencies can be pooled through sharing, but they also have three or more people in the same pool. Therefore, creating counterfeit copies of cryptocurrencies is almost impossible, and this point alone raises their demand higher.
- Doesn’t Depreciate Like Local Currencies
Cryptocurrencies have not yet become a currency in any part of the world. This means you may not be able to buy specific items with these currencies all around the world, but you can still buy a car for sale through these cryptocurrencies. These currencies are irregularly used as a cryptocurrency to buy or sell products. Consider cryptocurrencies just like any metal or specifically as gold. One can trade gold for currency notes.
Similarly, one can trade cryptocurrency for currency notes. The best part? Just like gold, cryptocurrencies are inflation averse.
- Cryptocurrency Is a Long-term Investment
Investors who are looking for options to invest their hard-earned money need to view cryptocurrency as a long-term investment opportunity.
Most of these cryptocurrencies had remained stable during the last few years, expect 2017, when they witnessed a sharp increase followed by a sharp decrease. So far, most cryptocurrencies have witnessed an upward trend this year. This means they are on the rise and therefore offer a great opportunity to investors who are looking for safe, faster yet long-term, and a higher return on their investments.
- Blockchain A New Medium for Innovation
Even if you are not directly investing in cryptocurrencies, you can invest in blockchain. Many companies are working on blockchain technology to create apps that can avert data theft. These blockchain apps can be used for financial transactions of the future. There are many more areas where blockchain is working, such as AI, Health, Data Sciences, and many more. Those who are not interested in cryptocurrency or are skeptical about its future growth can take a look at Blockchain and invest in one of the startups that are working on blockchain technologies.
Investing In Cryptocurrencies? Do Your Research
While there are no evident risks of investing in cryptocurrencies. But to keep the blog unbiased and research-focused, here are specific recommendations that you must follow to invest prudently.
Note that cryptocurrencies, like any other currency, requires constant monitoring. And since you will be investing your hard-earned money in it, make sure you are always alert about the developments related to it.
- Cryptocurrencies Have Witnessed Wild Market Fluctuations In the Past Few Years
In 2017, Cryptocurrencies experienced a boom. The valuation of a single bitcoin went up from $2000 to $20,000. But then the bubble burst and the coin came back to $6000 in a few weeks. Although it was an excellent opportunity for people, who invested in cryptocurrency when it was at its low. It was equally devastating for people who bought it when the cryptocurrency was at its all-time high. Most people even spent their life savings just to buy cryptocurrencies at that time.
Our recommendation to investors is, DON’T BE LIKE THESE GUYS.
We have said earlier that as an investor, you need to be vigilant when investing in cryptocurrencies. Consider these currencies as a long-time game. Don’t focus on short-term profits, and you will get benefit from them.
- Crypto Wallets Can Secure Your Cryptocurrencies
There have been incidences where cryptocurrencies were stolen. However, if you are using a crypto wallet to store your keys, and even if someone steals it, they won’t be able to get control of your cryptocurrencies. But this will also mean that you will lose control over your cryptocurrencies.
Crypto Wallets are made up of two keys: Private and Public. You need to keep the private key safe. If you misplace it, you won’t be able to access your cryptocurrencies. But if you have a hardware crypto wallet, you can ask the company that issued it to send a renewed crypto key for accessing your wallet.
Are Cryptocurrencies Good for Investment?
Although cryptocurrencies have experienced crests and troughs in dollar value, they offer a sound long-term investment opportunity for those who want to invest safely.
As Warren Buffet says, never put all your eggs in one basket… so, investors should take heed and invest in multiple options so that their profits balance out their losses.