Advantages and disadvantages of investing in cryptocurrency

Advantages and disadvantages of investing in cryptocurrency

The advantages of investing in cryptocurrencies include:

  • High returns. Cryptocurrencies are much easier and faster to earn than fiduciary currency pairs, bonds, stocks, mutual funds and other assets. . If you examine the growth rates of most relatively promising cryptocurrencies, they break new records every season. The most striking example here is bitcoin. Every year, the rate of this cryptocurrency grows not arithmetically, but exponentially.
  • Availability of liquidity. With the growth of a large number of cryptocurrencies, the demand for this resource grows as well. Because of this, we can always quickly buy and sell cryptocurrency, instead of waiting for a buyer to appear. This fact gives us several actions at once, making the maximum profit from the investment
  • Decentralization of digital money. Cryptocurrency rates are not controlled in any way by state structures or individual large banks. Therefore, large market players cannot influence the growth or decline of crypto.
  • Low entry threshold. An investor can invest a minimal amount of fiduciary money to purchase a cryptocurrency with it.
  • Low costs. The securities market has a cumbersome infrastructure of intermediaries (bank clerks, custodian employees, and others), who “pluck” their percentage from each transaction. But the cryptocurrency market works without bureaucracy, which allows not to give numerous commissions to intermediaries. Blockchain becomes another advantage of working with cryptocurrency, because thanks to it we do not need to go to the bank, wait for transfers and pay commissions.
  • Investor anonymity. When opening a bank account, the user reveals a lot of data about himself. While for the purchase of cryptocurrency, no personal information is requested.
  • Great choice. If you find a good exchange to work with, it will offer you not only safe, but also extremely productive working conditions. The tools from the exchange and the availability of a large number of available cryptocurrencies will help make the investment process. Study the markets and invest in what seems to be the most promising.

Proper use of the listed advantages will positively influence the work with cryptocurrency. If you take the time to study the markets, strategies and ways to invest, this resource can bring excellent profits

Disadvantages of cryptocurrency investments

The minuses of investing in cryptocurrency are:

  • The volatility of most cryptocurrencies is still quite high – the price of crypto can change significantly over several days and sometimes hours. Therefore, an investor should not invest in cryptocurrency assets with money that may be needed in the near future. After all, in the case of an unfavorable reversal of the currency, you will have to sell it at a loss. But this disadvantage applies more to mining and long-term investments. But in the case of trading, on the contrary, with a competent approach it is possible to make a good profit on volatile assets.
  • Now more and more people are starting to invest in crypto, which means that in the near future the market will become more predictable and opportunities to make huge profits will disappear. Therefore, it is better not to put off the decision to invest in cryptocurrency, but to start acting now.
  • Some countries impose bans on the use of cryptocurrencies.

Risks of cryptocurrency investments

It is worth remembering that investing in crypto cannot be considered completely safe. The risks of investing in cryptocurrency include:

  • The risk of digital currency prohibition and invalidation of completed transactions at the legislative level. Although Russian legislation, on the contrary, is beginning to change in the direction of increasing recognition of cryptocurrencies, and discussions are already underway to allow certain types of digital coins as a means of payment.
  • The risk of systemic currency declines. However, this risk is inherent in all investment assets without exception – you can never give a one hundred percent guarantee in the growth of something’s value.
  • The risk of losing coins due to hacking. To avoid such an outcome, you should use cold wallets. This is what cryptocurrency storages are called without constant access to the network, which makes it difficult for hackers to attack and ensures the safety of digital money.

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