More than a decade ago, Bitcoin was presented to the world. This new form of investment introduced the idea of cryptocurrencies, and had great promise and expectations of changing the financial environment. Although this seems to be the case, the revolution of cryptocurrencies still has a long way to go. In recent years, cryptocurrency has emerged as a global phenomenon; however, much needs to be learnt about this rapidly growing technology.
Investing in cryptocurrencies has the potential to make you incredibly wealthy. However, like any other investment, this isn’t always a sure thing. It sounds strange to make such contradicting statements, doesn’t it? The truth is, investing in cryptocurrencies carries risk, but the rewards may be enormous. In many ways, its digital component also makes it a unique form of investment. With the emergence of non-fungible tokens (NFTs) and the power of blockchain to reimagine processes and flows, you have a powerful combination.
Today, there is a lot of talk about crypto. In many ways, this is a good thing. However, it also means there is some misinformation and a lot of confusion. So, are you considering investing in crypto? Let’s briefly explore what investing in cryptocurrencies has to offer.
Why invest in crypto?
Cryptocurrencies have been dubbed a game-changing technology that has the potential to change a wide range of sectors. The uniqueness of cryptocurrencies makes them potentially useful as a store of value.
A solid, long-term store of wealth is another popular argument for investing in cryptocurrencies. Most cryptocurrencies, unlike conventional money, have a finite supply that is governed by mathematical algorithms. So, no political party or government agency will ever be able to weaken their purchasing power through inflation. It’s also hard for governments to tax or seize tokens without the owner’s consent, as cryptocurrencies are cryptographic.
Are there negative sides to investing in cryptocurrencies?
Trading cryptocurrencies is a game of chance. Because it’s exchanged from person to person without any fundamental regulations, there’s no pattern to the rise and fall of its value. Cryptocurrencies have an unproven rate of return. There isn’t enough data to create a long-term investing plan based on cryptocurrency.
Another negative side of investing in crypto comes from your ignorance of this form of investment. When you’re ignorant, you’re vulnerable to exploitation. In my opinion, anyone who cannot explain their investments to a 10-year-old should not be investing in them in the first place. Therefore, be sure to conduct ample research before you go ahead to make such an investment.
Unfortunately, although this investment is safe, there are a few security challenges. Hackers have stolen tokens worth billions of dollars from exchanges, wallet software, and ordinary users. Several schemes trick users into giving up their tokens, such as doubling scams and social engineering.
Unlike other applications, most digital wallets cannot be reset if the passphrase is forgotten. This means users lose hundreds of millions of dollars worth of cryptocurrency due to forgotten passwords or misplaced devices.
So, what’s the result?
The path to financial security is long and winding, and there are still far too many questions about cryptocurrencies to be answered. Is it possible that cryptocurrency may gain legitimacy as a legitimate investment option in the future? Sure!
Comentarios