It’s hard to know where to invest these days. The stock market is unpredictable, the housing market is uncertain and even gold isn’t bringing in the profits it used to.
So what are your options?
If you’re like many people these days, you may be considering cryptocurrency.
Cryptocurrency has surged in popularity over the last few years because of its decentralization and anonymity features.
But before you jump into this relatively new investment opportunity, keep reading to find out some pros and cons of cryptocurrency that can help you decide whether or not it is something worth investing in.
What is cryptocurrency?
Before we get into the details, let’s start with a quick rundown of exactly what cryptocurrency is.
Cryptocurrency is a form of digital currency that is used to buy, sell or trade goods online.
Unlike traditional forms of currency like the dollar and euro which are backed by a central bank and controlled by government laws, cryptocurrencies have no centralized authority figure behind them.
Cryptocurrencies work using a technology called blockchain. Blockchain is a digital ledger that is shared with all the currencies in circulation.
This means that everyone who trades cryptocurrencies has access to the same transaction records and information, so it’s very difficult for anyone to cheat or steal from another person.
The transactions are also made anonymous because they don’t need any of your personal details like an address, phone number, or email address. With this anonymity, however, it can sometimes be more difficult for cryptocurrencies to function as a legitimate form of currency in countries with strict financial regulations.
How secure is Cryptocurrency?
Because of blockchain technology, cryptocurrencies can be more secure than other currencies.
That said, there are still steps you should take to protect your cryptocurrency if you decide to invest.
First, you should use a strong password and make sure you don’t share it with anyone.
Next, turn on two-factor authentication for added security (this will require providing your cell phone number to an app or site each time you log in).
Finally, try to limit the number of public cryptocurrency accounts that you use because these can make it easier for hackers to access all of them at once if they gain access to one account.
In short, cryptocurrencies are secure but still require a lot of care and attention in order to stay safe.
Weigh the pros and cons of investing in Cryptocurrency.
There are a lot of risks when it comes to investing in cryptocurrency, however, there is also the potential for huge rewards — if you’re smart about it.
That makes your decision a difficult one: take the plunge and hope that your gamble pays off, or stay on the sidelines and watch others make money from their investments that you passed up.
There are strong arguments for both sides of the issue, and it’s up to you to figure out what feels right.
The case for cryptocurrency as an investment:
It is much easier than ever before to purchase cryptocurrencies because exchanges that allow transactions with credit cards or bank transfers now exist in most countries. This makes investing very accessible, which will likely lead to cryptocurrency becoming more widely accepted and integrated into society.
As mentioned before, cryptocurrency is backed by blockchain technology, which has the potential to change how many industries operate in significant ways.
The number of large corporations exploring applications built on top of Ethereum’s protocol and Bitcoin’s Blockchain demonstrate that there are enough people with faith in this new system to warrant a closer look at cryptocurrency as an investment.
The case against cryptocurrency as an investment:
The most common argument against cryptocurrency is that it is volatile. This means the price of a coin can change drastically over short time periods, which makes it hard to know how much you will be able to spend on any given day.
Another argument against cryptocurrency is that it does not have any inherent value.
The coins themselves don’t hold anything of material worth, the only value they have comes from what others are willing to pay for them at a given time.
A perfect example of this is detailed in the rise of dogecoin which began as a joke on the internet. Given that it was not based on any type of meaningful value, it was impossible to accurately predict that the value would increase 11,000% (yes, you read that right!) up to this point in 2021.
Is cryptocurrency a good long-term investment?
This is an interesting question to ask. Generally speaking, people are reluctant to invest in assets that have no intrinsic value. However, more and more experts are saying that it would be wise for investors to allocate some of their wealth into cryptocurrencies because of the high return on investments. Even though it is a relatively new investment vehicle, there are plenty of good reasons to be bullish on cryptocurrencies.
Using Bitcoin as an example, the price has experienced a meteoric rise over the past few years. It’s been argued that this excitement with Bitcoin could be related to speculation of future regulation and legitimization in many countries around the world, as well as its increasing adoption by big-name retailers like Microsoft and Steam.
Additionally, there are other cryptocurrencies coming onto the scene that have seen a recent surge in their prices, such as Ethereum and Litecoin.
The general consensus among experts is that if you’re considering investing some of your wealth into cryptocurrencies, it would be wise to do so sooner rather than later before the price continues its upward trajectory.
For those looking to diversify their investments, cryptocurrency could be a good addition.
Investing in cryptocurrency is speculative and may not be right for everyone but it’s worth considering as an option if you are interested in adding more diversity to your portfolio.
In this blog post, we’ve discussed some of the pros and cons of investing in cryptocurrency so that you can make an informed decision about whether or not it’s something you want to explore further.
If you’re ready to invest now or just want to learn more, visit us at www.crossroads-planning.com where our team will gladly answer any questions or concerns that arise while learning about how cryptocurrencies work! Interested? Contact us today!