Cryptocurrencies have become the next big thing these days, since the surge in Bitcoin prices. When investors first hear about cryptocurrency, they begin asking a number of questions. There is the concern of fear of the unknown. Next, they also want to know if they are going to stick around for the long haul or not. Can you really trust the new kid on the block? How can you find the answers in order to decide if it is worth investing? The best way to make a decision is to understand the perks and risks associated with investment in the cryptocurrency market.
First, let’s take a look at the risks:
- As compared to other currencies, cryptocurrencies are not backed by up gold or any other precious metal. At the end of the day, it all comes down to computers and math. Moreover, there are no actual physical coins or notes and you will not find a central repository either. Since they are a virtual currency, investors have to have a backup copy of their holdings in the case of a computer crash. If you don’t backup, your balance could be wiped out irrevocably if there is a crash.
- Cryptocurrencies are subject to wild market fluctuations. Like other volatile markets, the wild fluctuations can cause you to gain or lose massive sums of money, depending on your investment and the fluctuations.
- Cryptocurrency can be stolen through hacking. Cyber-security experts and hackers are embroiled in a constant battle in this regard, which means that you have to be on your guard at all times and protect your investment.
- The introduction of cryptocurrency regulations in different countries could create a problem in buying and selling them as not all governments are in favor of this new introduction.
Now that we know the risks, let’s explore the perks cryptocurrency can offer:
- Cryptocurrencieshave made it immensely secure and easy to transfer funds to anyone, whether an individual or a business. The transaction is kept secure through the use of private and public keys. In addition, the fund transfer fees are also not very high and this is a plus.
- The blockchain technology used by cryptocurrency is an online ledger that can be transferred to all PCs and it cannot be altered. Therefore, it can be extremely useful in keeping everyone honest. It provides investors with the ability of verifying transactions with ease and this ensures a good level of transparency in the market.
The future of cryptocurrency seems to be getting better with each passing year. It is another step to digitizing the global financial system and this is a good decision because minting coins and paper is turning out to be very expensive and may be rendered obsolete in the future. While Bitcoin is the cryptocurrency that got the ball rolling, there are various other options such as Litecoin, Ethereum, Ripple, Dash, PPCoin and Monero that you can consider for investment purposes. You can visit an exchange site and purchase the quantity you are comfortable with.