With the current economic crisis that the world is dealing with today, many people are asking “is cryptocurrency good to invest in?”. To answer this question, we have to look at the main concepts behind cryptocurrency.
The blockchain system
It is important to understand how the “blockchain” works before deciding to invest in any particular asset class. Most of the top crypto systems around the world are based on the principal of decentralization. This means that the supply chain cannot be controlled by any single entity. Instead, each node in the network acts as a third party with respect to the transfer of funds. While some claim that this allows for anonymity and security, others see this as a significant hindrance. Regardless of your opinion on the validity of crypto systems as an asset class, it is important to understand how the protocols work before you decide what crypto systems are right for you and your portfolio.
There are, however, many advantages of buying bitcoin. In a time when traditional money is slowly being displaced by digital currencies like Bitcoins and Ether, one should be aware of these advantages. This is why people are so keen on trading and investing in this way. Here is a look at some of the advantages and disadvantages of buying cryptocurrency, which may help you with the question “is cryptocurrency good to invest in”.
Pros
Convenience
Cryptocurrency offers quick and secure transaction execution. No longer must people wait around in long queues at bank branches and financial institutions to purchase money, make payments or transfer money. With the invention of new technologies like the bitcoin p2p network and the block chain technology, instant transactions can now take place between two parties in just seconds.
Potential for high returns
As cryptocurrency is getting more and more popular, the possibilities for high returns grow at a railway speed. With banks accepting cryptos as a payment method and rich investors like Elon Musk promoting and pumping them, a future where cryptos are more popular than fiat money doesn’t seem so unrealistic. This pushes the value of crypto coins on a daily basis.
Security
One of the most important tasks when buying any kind of currencies is to make use of a secure and reliable wallet to store it. Many traditional wallets are susceptible to hacking attacks, wherein private information can be obtained. This is not a problem when you buy cryptocurrency from online services. Once all the transactions are completed and a balance is verified by the service, most people can breathe a sigh of relief.
Cons
Extreme liquidity
Some of the disadvantages of cryptocurrency are the extreme liquidity of some of the exchanges. At present, a lot of cryptocurrencies are highly valued. This means that there is always a buying pressure, driving up the price. While this provides an advantage of high liquidity, it also means that it is quite easy for someone to quickly manipulate the price of a given currency.
Lack of regulation
The second major cryptocurrency disadvantage is that it lacks the security features of a true paper currency like the US dollar, Canadian dollar or Australian dollar. There are many reasons why this is a problem including; the potential for government seizure of assets, the lack of regulatory protection from fraud and the high volatility of the market. It is very difficult to predict what the price of Cryptocurrencies will be and the potential for large losses is exacerbated by the fact that there are no effective ways to regulate the supply, demand or creation of new currencies.
Black market
The third major cryptocurrency disadvantage is that it poses significant operational problems for law enforcement agencies. The growth of the black market for cryptocurrencies and associated technology such as Tor and IOUs poses significant operational problems for law enforcement officials. Law enforcement cannot easily trace the flow of money from the street, and the decentralized nature of cryptocurrencies makes it nearly impossible to stop the flow of money to criminals. This makes it very difficult for law enforcement to track criminals and stop illegal transactions, which is something to consider when deciding if cryptocurrency is a good investment.
Final thoughts
So, is cryptocurrency good to invest in? It is a good investment for those who are prepared for the risks and the inconveniences associated with owning cryptos. It can be a highly rewarding and convenient way of generating wealth and preserving savings, but each crypto owner has to do their research before throwing a big amount of funds into crypto.
