It is becoming the topic everyone wants to talk about – should you invest your hard-earned cash into cryptocurrencies?
Like anything in investing, you can make a great return, but you can also make a loss. So it is essential only to invest what you can comfortably afford to lose without impacting your regular finances.
What are the risks of investing in cryptocurrency?
There are very few risk-free investments, and the volatility of the crypto means this certainly can present risks. It becomes even riskier when there are multiple places to buy crypto – you need to be able to tell which are legit and which aren’t.
It is also your responsibility to store your cryptocurrencies safely, and it can present a challenge for many. There are a few ways that you might choose to store your cryptocurrencies.
You might choose to leave it stored in the digital exchange – just keep in mind they can be hacked – although unlikely the chance is never zero.
One of the preferred options of cryptocurrency owners is cold storage. Cold storage is an offline way to store your coins. You’ll use a paper wallet or hardware to store your coins. Cold storage has some unique challenges, though, because it’s all too easy to lose your private key. If you lose your private key, you lose access to your cryptocurrency.
You are effectively losing it forever.
And, if you aren’t putting your cash into the OG cryptocurrency, Bitcoin, you have no guarantee that the currency project you have invested in will take off. And, there is always the chance that financial regulators will throw the hammer down and change how crypto functions.
Is cryptocurrency a good long-term investment?
When we talk about long-term investment, you are talking specifically about investments that last five years or more. Although there is no clearly defined timeline, it is accepted that long-term means five years or longer in most cases.
You should keep in mind that if you are investing in projects, these will need to be widely adopted before they can be considered a success.
When you are investing over a long-term period, you can estimate how much you could be earning interest on your USDC and a good overview of other opportunities.
The Ethereum platform offers coins and tokens, which is why it is such a popular exchange.
Because of the enormous number of cryptocurrencies established on the Ethereum platform and the open-source nature of decentralized applications, Ethereum has the potential to profit from the network effect and generate long-term value.
The Ethereum platform allows for the deployment using “smart contracts,” which run automatically depending on terms specified directly into the code of the contract.
The Ethereum network takes Ether from users in return for executing smart contracts. Smart contracts can disrupt large businesses like real estate and finance, as well as establish totally new markets.
The Ether token gains usefulness and value as the Ethereum platform gets more widely utilized throughout the world. Investors that believe in the Ethereum platform’s long-term potential may profit directly by purchasing Ether.
The other biggest contender is Bitcoin.
Bitcoin is known for being the first cryptocurrency that was able to make digital purchases, trades, and more as a decentralized currency.
What makes bitcoin so interesting to people who don’t own it yet, is the number of other people that own it. It is popular for being the first, but also the most well-known.
So when people consider buying cryptocurrency, they will naturally default to the one that they have heard of. Bitcoin is so popular as a cryptocurrency that people will use bitcoin to mean cryptocurrency.
Bitcoin is typically a safe bet when it comes to investing since there is a limited amount of bitcoin that will be available. It has a cap that sits just under 21 million, and once they have all been mined – there won’t be any more released. This differs from most other crypto coins and regular currency too.
Since centralized bank authorities can print more cash as they please, coins like DOGE don’t have a set limit.
A very popular option right now is to invest in NFTs. Non-fungible tokens, like artwork, for example, are unique. Unlike trading coins for other coins, NFTs cannot be traded in the same way.
NFTs are often a great idea for people who want to dabble in cryptocurrency, and own something unique like digital artwork.
Is cryptocurrency the right thing for you?
When you are investing, you should have a diverse portfolio. This means a range of different items that your money is in.
The reason for diversification is that if the housing market crashes, and that is where all your money is, you’re going to lose everything – or at least take a sizable hit.
However, if you had invested across the property, bitcoin, gold, stocks, and others, your investment in your housing might sink – but the rest will keep you afloat in terms of your assets.
It also pays if you understand a little bit more about how blockchain technology works, which you can read here; Blockchain Technology Development and its future.
Investing directly into cryptocurrency isn’t the only way for you to benefit from its popularity, though. Many large tech companies are making investments in bitcoin and altcoin payment options. The likes of PayPal, Square, IBM, and Coinbase all have stocks that are available. So if cryptocurrency does well, you will see that reflected in your stocks.
Much of the decision to invest in cryptocurrency will be about how you feel about it. Do you think it has a bright future and it is something that you want to be a part of? That is usually an indicator that you should strongly consider that investment.
When you do make the leap, and your crypto is burning a hole in your digital wallet, here are some fun places where you can spend your cryptocurrency: Spending Your Crypto Investments: How to Do It, What to Buy.