How Safe is Cryptocurrency
Can you become wealthy by investing in cryptocurrency in 2021? Yes, you can. But you can also wipe out your account. How can these two statements be true? As the popular saying goes, the higher the risk, the higher the reward. Dealing with cryptocurrency is highly risky but also extremely profitable. Cryptocurrency is one of the best investments if you are looking to get exposure to the world of digital currency. On the other hand, if you are looking for a safe and lucrative way to invest, you should go for stock of companies. In this post, we are going to discuss the pros and cons of investing in cryptocurrency and how you can increase your chances of success in this area. Let’s get started!
Safety of cryptocurrency
When you look at a few factors on investing, you’ll conclude that cryptocurrency is not entirely safe. However, other factors clearly show that the future of cryptocurrency is brighter like never before.
Risks associated with cryptocurrency
Unlike stocks, cryptocurrency exchanges are vulnerable to being hacked and a high target to various criminal activities. These security issues have led to the loss of money and time for investors who’ve had their currencies stolen from them. Storing cryptocurrency safely is harder than owning bonds or stocks. Cryptocurrency exchanges make it quite easy to purchase and sell crypto assets like Ethereum and Bitcoin. However, most people don’t like keeping these digital assets due to the risk of theft and cyberattacks.
Some owners of these digital currencies prefer the offline storage alternatives available such as paper wallets or hardware. However, offline storages have its limitations. The biggest issue is losing the private key which will make it impossible for you to access your digital currencies.
Also, there is no guarantee that your project will succeed. Thousands of cryptocurrency projects are competing fiercely. And there are scam projects in this space too. In the end, only a few cryptocurrency projects succeed.
Regulators can also come up with policies to crack down on cryptocurrency especially if they start seeing these digital currencies as a threat instead of innovative technology. Since cryptocurrency heavily relies on sophisticated technology, it increases the risk for people who are looking forward to investing. A huge portion of this technology is at the development stage and it has not yet been proven to work in the real world.
Despite the risks associated with digital currencies and the entire blockchain industry, the growth rate cannot be ignored. A huge part of the needed infrastructure is being built and investors can easily access their much-valued investments. Private and professional investors are receiving the tools that they need to access and manage their assets in the digital space.
The markets in this industry are being established and many organizations are getting exposed to this sector. Huge financial organizations such as PayPal and Square have made the process of hiring paper writers and buying and selling cryptocurrencies on their platforms easy. The same companies have also purchased digital currencies worth millions of dollars.
While cryptocurrency is highly risky, the pace of adoption is a strong signal that the industry is gaining traction and thriving. Investors and big organizations are seeking to gain exposure to this field since others have invested huge amounts of money successfully.
Cryptocurrency as a long term investment
Most cryptocurrencies such as Ethereum and Bitcoin were launched with objectives that will likely be achieved in the next few years. While we cannot guarantee the success of any digital currency, if a currency achieves its goals, then the investors will be rewarded in the long run. For any project in this field to succeed, it has to be adopted massively.
Bitcoin is the most popular cryptocurrency in the world. Most people want to buy it because most people own it. At the moment, most investors are viewing it as digital gold. However, it can also be used as a form of cash.
Investors and experts in this field believe that the currency will increase in value in the long run because its supply is constant unlike the supply of the US dollar or the Japanese Yen. Bitcoin’s supply has been limited to 21 million coins. On the other hand, the central bank controls fiat currencies which can be printed whenever politicians want. Therefore, most investors expect a cryptocurrency to gain value as regular currencies depreciate. At the moment, Bitcoin can become the first-ever global currency.
The ether coin originates from the Ethereum platform. It can be bought by investors who are looking forward to getting exposed to the Ethereum platform. While bitcoin is the digital gold, Ethereum is quickly gaining traction. It is currently building a platform that supports other digital currencies and a huge ecosystem of decentralized apps.
The number of digital currencies built on this platform together with the open-source of decentralized apps has created a lot of opportunities for Ethereum to create long-term and sustainable value. The platform allows the use of contracts to automatically execute based on the written terms into the code of the contract.
The network collects Ether from people who use smart contracts. Smart contract technology has the potential of disrupting huge industries such as banking and real estate while also creating new markets in the space. As the platform gets utilized by most people, Ether increases in value and utility. Investors can take advantage of the platform by buying Ether.
Is cryptocurrency worth it?
One of the best ways to diversify your portfolio is by owning cryptocurrency. Bitcoin and other digital currencies have shown nearly zero correlation to the performance of the stock market. Therefore, if you believe that investing in cryptocurrency will pay off in the long run, this is the best time to purchase your preferred currencies. For every type of coin that you choose to invest in, conduct thorough research to make informed decisions.
Simple tips to successfully investing in cryptocurrency
As millions of people trade cryptocurrency, you need to equip yourself with all the knowledge that you’ll need to trade successfully and become richer. Since trading cryptocurrency is not a simple procedure, here are a few tips that will help you trade successfully and increase your chances of winning.
Know where to store your investment
Before you start investing massively, you need to know how to store these coins. You need to learn how to buy and sell them and the different exchanges that you should use. For most beginners, exchanging with Coinbase is a great alternative because of its intuitive interface and ease of purchasing.
Look at the market cap
One of the most common mistakes that new traders in this industry make is that they make their investment decisions based on the current price of the coin. The reality is that the value of the cryptocurrency is valid after considering its supply. Therefore, if you want to purchase Ethereum, look at its market cap before purchasing.
Diversify your investment
While there are thousands of coins out there, most people tend to go for the most prominent and largest one. Most people invest in coins that have high liquidity and volume. There are other coins that you should invest in to manage your risk effectively.
The process of buying and selling cryptocurrency is not straightforward. However, with the right tips and tools, you can greatly minimize your risks and increase your chances of success.
Thomas Jackson a professional freelance content writer at RushEssay and professional writer service. He is also an active member of several writing clubs in New York. He has written several songs since he was a child. He gets inspiration from the live concerts he does in front of close friends and family members.