According to a recent study, around 14% of Americans now own at least some form of cryptocurrency. Are you looking to join those ranks?
If you want to invest in cryptocurrency, you may be overwhelmed by the technical jargon and complexity that surrounds this pursuit. What exactly is it and how do you buy a share?
Today, we’re discussing the ins and outs of this investment and sharing a few ways you can determine if it’s the right move for you.
The Pros of Investing in Cryptocurrency
Let’s start out on a positive note! If you make all of the right moves, it is possible to make a significant amount of money by investing in cryptocurrency. However, the exact opposite also holds true.
Before we weigh in on the risks involved, let’s cover some of the reasons why it’s smart to invest in crypto.
User-Friendly Trading Platforms
Much of cryptocurrency centers on using your computer to solve complex mathematical algorithms. This process is called mining, and it helps the blockchain process individual transactions.
While this is one way to get into the crypto game, you can also trade the coins. To do so, you’ll first buy a form of cryptocurrency (such as Bitcoin or Ethereum) using your real money. Then, you’ll hold it and wait for the right time to sell. This is one of the simplest and most straightforward ways to make money from cryptocurrency.
When it first emerged, there weren’t many online trading platforms that made this process easy. Now, however, that isn’t the case. There are many different digital platforms that facilitate these transactions on a continuous basis, and trading cryptocurrency is easier than ever.
Simple Fund Transfers
Another reason why you might want to invest in crypto? Thanks to the work of miners around the world, the transactions are simple and usually occur in real-time.
When you’re ready to confirm a transaction, you can do so in just a few clicks. Then, you’ll receive your payment as soon as the computation is processed, which isn’t usually near-instantaneous.
Low Risk of Identity Theft
Worried about entering the crypto space because the idea of trading money online could expose you to a security risk? With cryptocurrency, this isn’t as big of a threat.
Each time you complete a transaction, certain details are recorded in the general ledger, where they’re accessible to everyone on the blockchain. These include:
- The web address of the transaction
- The transaction hash
- The associated blockchain number
- The miner’s name
Still, the actual process of trading and transferring those assets takes place anonymously. You don’t have to give out sensitive personal details, and the risk of identity theft is low.
Financial Control
With many investments, there are strict rules around how you can use the money and when you can take it out of your account. This isn’t the case with crypto.
Instead, you’ll enjoy full autonomy over your funds. You choose the type of digital currency to invest in, how you’ll earn it, where you’ll spend it, and who you share it with.
Saving up for your retirement? Planning to send your child to college? Cryptocurrency could be an alternative investment to round out your other accounts.
Around-the-Clock Accessibility
Crypto investors love the process because it can take place at any time, from anywhere. There isn’t a central authority that governs the blockchain, so transactions can occur around the clock.
As long the user you’re trading with is active and online, you can proceed. It doesn’t matter where you’re geographically located, or the timezone you’re in. This is a major benefit compared to other types of peer-to-peer transactions.
The Cons of Investing in Cryptocurrency
While there are many benefits to investing in cryptocurrency, it’s also important to understand the risks. Here are a few points to keep in mind before you take the next step forward.
Price Volatility
Cryptocurrency prices are notoriously fickle, subject to fluctuations based on news reports and world events. Some investors might view this factor as an asset, buying shares when prices drop and selling them once the value goes back up.
However, this is a high-risk approach that comes with its own share of vulnerabilities. If you’re looking for a solid, steady investment that will yield low-risk, long-term rewards, then it might be better to put your money elsewhere.
Hacking Risks
We’ve already discussed that the threat of identity theft is relatively low with cryptocurrency. However, that doesn’t mean you’re entirely safe online.
Increasingly, hackers are learning how to get their way into digital wallets, using sophisticated methods to break into trading platforms. If they manage to do so, then they can redirect the funds into their own pockets. To protect yourself, choose a platform that has strict security measures in place to prevent this type of vulnerability.
By avoiding low-quality sites and ensuring a secure connection, you can invest with confidence and know that your money is safe.
Complex Technicalities
To the uninitiated, cryptocurrency can seem like a foreign language. There are so many terms to learn and computations to consider, that you might be intimidated by the concept from the very start.
Still, it’s worth understanding if you consider this a viable financial prospect. Today, you find plenty of online resources dedicated to the topic, explaining everything from how Bitcoin works to how to read the investing charts.
Is It Time to Invest in Cryptocurrency?
As cryptocurrency becomes more mainstream, investing opportunities are poised to grow exponentially. Deciding to join the trend now could pay off handsomely in the future. At the same time, it’s important to proceed with caution and only do so once you fully understand what’s at stake.
If you do decide to invest in cryptocurrency, make sure that the trading platform you select is reputable, high-quality, and well-reviewed. This way, you can lower your risks and protect yourself against the threat of online theft.
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