Cryptocurrencies are gaining immense popularity lately, and for good reason too – many people have earned millions investing in these digital tokens. However, there is no denying that cryptocurrencies come with a lot of risk and volatility; so, it’s essential to take the time to do your research before you invest. To help jumpstart your process, here are six facts both positive and negative about investing in cryptocurrencies. For most people, Bitcoin trading involves buying this cryptocurrency on a cryptocurrency exchange like BitiPlex.
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Positive Things about Cryptocurrency
Liquidity
Investing in an asset like a startup can tie up your money for many years, leaving you with little to no liquidity. Fortunately, investing in cryptocurrencies offers more liquid investments and faster turnover times. Markets are open 24/7, meaning buyers and sellers can transact quickly at any time of day. Additionally, cryptocurrency purchases and sales often occur instantaneously which makes it much easier to respond swiftly when the markets fluctuate.
Transparency
Cryptocurrencies are often very open with their advancements and objectives. Many will provide comprehensive details on the project and technology, such as a whitepaper that breaks down the development timeline of the network. Other materials include roadmap information, team member listings, and publicly inspectable code found in repositories like Github. Whenever there is limited activity observed on a cryptocurrency’s Github page it should raise cautionary flags for potential investors.
Huge Potential for Returns
Wondering if all the hype around cryptocurrency is real? Put it this way – investing $1,000 in Bitcoin back in 2013 would pay off much more than a thousandfold: you’d be sitting on over $400,000! Dozens of altcoins have recently entered the top 10 for market capitalization – with some rising by an eye-popping 1000% or more just within the past few months.
Negative Things about Cryptocurrency
Technical Difficulties
The simple fact that cryptos are completely electronic is among the toughest things to comprehend concerning investing in them. You can easily equate almost another investment to something tangible though you can not hold a Bitcoin in your hand. These assets are usually subjected to technical problems since they’re all digital. When they are hectic, markets and exchanges may become slow. Deposits, as well as withdrawals, are usually disabled for particular tokens whenever the networks are very busy.
Security
Cryptocurrencies come with certain risks, including the potential for online theft and hacking. Exchanges have fallen victim to major cyberattacks, resulting in users losing millions of dollars worth of digital tokens. Because crypto is not FDIC insured, it’s important that you practise caution when buying, selling or storing coins – especially if those coins are stored on an exchange. For the utmost security, it is best to opt for a cold storage wallet, which provides you absolute control over your private keys. These critical encryption keys give access to funds on the blockchain – so make sure they’re securely stored offline at all times!
It’s quite risky to purchase cryptos. The market conditions are extremely volatile as well as the technology is still fairly new. They’re nevertheless, an excellent investment opportunity for anybody who wishes to invest. Handle them like you would any purchase and please perform your very very own investigation.
Inexperienced Teams
Each crypto is a startup that’s attempting to resolve a difficulty with a service. Cryptocurrencies continue to be fairly young in the market although they’ve only been in existence for just a while. There are numerous teams in this sector with almost no experience and not many individuals with substantial knowledge. If the team isn’t managed appropriately, the project could fall apart the same as a startup. In most cases, project details will include information about the team, and conducting a quick LinkedIn search can reveal valuable insights into a person’s expertise.