Crypto Currency | Should You Invest In This Popular Blockchain Technology?

According to Statistic Brain, there are about 1,138 cryptocurrencies out there. While a number of them have been making headlines, there have been lingering questions on the minds of potential investors on what a cryptocurrency really is and whether it’s safe to put your money in it. Well, investing in cryptocurrencies could go both ways; well and bad because the market is still young and volatile.

With that in mind, here are a number of pros and cons on investing in cryptocurrency as well as some advice on the side.

Crypto Currency - To Invest or Not to Invest? That is the question

General advice

For a start, keep it simple before you can ease up into the market. Take about 1% of your investable funds just to get your feet wet and although it probably won’t happen, you should always be prepared to lose everything. The least risky coins to invest in are the ones that have been around for a considerable time (longevity), have the highest market cap, and the highest market volume too. Most likely, they are also the most expensive.
Crypto Currency - To Invest or Not to Invest? That is the question

Pros and cons of cryptocurrency investment

There are numerous pros and cons to consider but the following is a sizeable summary.

PRO: Something to smile about investing in cryptocurrency is that the trade is still infant and quite uncharted. You could be making a good bet by buying a number of the top currencies if the market predictions are anything to go by. Notable investors for example suggest that Bitcoin could go up to $600K+ which is a great price from what it is trading at now.

CON: Right now, a cryptocurrency is considered a bubble. Bitcoin is a classic case that once burst in 2013 (from $260 to $130 in six hours). Since its inception, the cryptocurrency market has been known to be unstable. The price of a cryptocurrency can dangerously swing up and down in a single day.

PRO: The cryptocurrency trend could be an important value storage and medium of exchange in future. For day traders, it can be both risky and rewarding and for the long term, it is best if the current price is not the highest you will ever see.

CON: Even if investing in cryptocurrency is really a gold mine, you cannot for sure tell which currency will stick around for the longest.

PRO: Since the market is unpredictable, if you can time how you buy and sell like buying low and selling high, then you could make a kill out of cryptocurrencies.

CON: For a novice, the only sure way to buy cryptocurrency is through a company or by GBTC on the stock market. However, you will have to pay a premium for this. Even if you could go to the open internet exchange markets where the fees are lowest, the risks and complexities are much higher. In other words, even if there’s potential to make money, all trading options have costs that eat into potential gains.

PRO: In the US for example, cryptocurrency is legal, regulated, and taxed just like investment property. This is good because you can essentially keep your trades, gain capital gains, and be in good terms with the IRS.

CON: However, more coins could lead to an oversaturated market full of low quality coins and bad products. More so, such moves draw much scrutiny from regulators and they already have. This is because according to the major regulators like Russia, China, and the US, cryptocurrencies’ transaction anonymities have made them favorable for a number of illegal activities like money laundering etc.

PRO: In 2017, there was a huge boom of new ICOs and coins. Increased competition has always been good for any market.

CON: The exact rules surrounding investment in cryptocurrency aren’t what you would call clear. Assuming you do eventually wade through the murky investment waters, there are further tax implications on cryptocurrencies.

Crypto Currency - To Invest or Not to Invest? That is the question

The future

While you may have witnessed an increase in the number of merchants who accept cryptocurrencies, there’s still much to be done for them to be more widely accepted. For example, they are relatively complicated compared to conventional currencies which will mean a huge NO for the not technologically adept. However, most limitations will be gradually overcome with more technological advancements but growing popularity will bear the brunt of increased scrutiny and government regulation.

Crypto Currency - To Invest or Not to Invest? That is the question

So should you invest or not?

A cryptocurrency has no real value other than what a person is willing to pay for it. This exposes cryptocurrencies to price fluctuations which may at times be huge. Therefore if you are thinking of investing in them, you should consider your investment highly speculative. If you are a person who has low tolerance to volatility, you may need to look elsewhere but if you are patient and skillful enough, then you know this is a jackpot.

If you decide you are going to invest sign up for an account with Coinbase and we’ll both get a FREE $10.00 with Bitcoin.

Luiz Centenaro VP of E-Commerce at Rack Simply
Luiz Centenaro

VP of E-Commerce at Rack Simply

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