Investing in cryptocurrency – should you do it?
Others believe that despite of the underlying speculation and risk, bitcoin may dominate the financial market in the upcoming years.
About a decade ago, people around you would have made fun of you if you had a proportion of your investment portfolio in digital currencies. Digital currencies, more commonly known as crypto, are the types of virtual currencies that are secured via several cryptographic and digital means. However, nowadays, if you haven’t invested in the crypto yet, you would rather be considered as lagging behind.
It is a fact now that virtual currency is technically everywhere nowadays and no longer just for day traders and geeks. In fact, a lot of businesses around the world are beginning to incorporate crypto in their investments and utilizing it to introduce or launch several other products, while others have been trading it to maximize their profits. Join Bitcoin Equaliser for more information.
Increasing Demand & Popularity of Cryptocurrency
Last year in October, PayPal introduced a service that enabled its account holders to purchase, sell, or retain cryptocurrency, or to utilize it to purchase stuff across 26 million different merchants.
According to PayPal, conventional use of digital currencies has greatly been “held up by their restricted application as a financial tool of exchange due to fluctuation, charges and pace to transact.”
Still, PayPal believes that they could offer their platform to assist the crypto holders, allowing them to utilize crypto as a payment method.
“It is pretty clear that the global finance will switch to digital methods of transactions and currencies, bringing with it its specific advantages, for example the cost and time efficiency, speediness of the payments and the security of the transactions and most importantly the facility for governments to distribute funds to citizens more quickly and conveniently,” says Dan Schulman, president and CEO of PayPal in an interview to the press.
In order to grasp the meaning of everything discussed in this article earlier, we need to understand that as more and more organizations and businesses find ways to use crypto, digital currencies will become more widely used. The real question in consideration now is that should we invest in crypto?
Reasons Why You Should Invest in Cryptocurrency
One of the Associate Directors at Gemini, a digital currency investment platform, believes that crypto has become an integral part of the global finance and financial technology, after BTC reached an all-time high of beyond $40,000, and given that one of the major global organizations and institutions have recently purchased BTC and other cryptocurrencies.
In terms of advantages, Lovell says cryptocurrency gives consumers greater choice, independence, and opportunity in their finances. Further, cryptocurrency’s decentralized, open-source nature helps “eliminate the weak points of the modern banking system by bringing access directly to consumers,” she says. This makes it easier to buy, sell, store, and trade the best performing assets of the last decade.
Not only that, but many market analysts and experts believe that cryptocurrency is in its infancy. This means that, if you invest now, you could be getting in on the ground floor “even though the prices seem high.”
Several market analysts and experts have predicted that BTC might even reach a high threshold of as high as $100,000 per coin someday soon. One of the reports from Citibank also indicated that an industry insider thinks that BTC might even go beyond $300,000 per coin towards the end of this year.
Expert investors and market analysts on crypto market now believe that investing in a comparatively newer financial tool such as the bitcoin can enable you to gain large profits. Also, given the increasing demand and popularity as well as the use across the world and establishment of trading exchanges and platforms across the world, crypto is increasingly becoming a very liquid investment asset.
Reasons Why Investing in Cryptocurrency Might Backfire
However, investing in digital currencies is not considered to be the best idea by all. Also, one of the key features of crypto and its newness is the underlying huge fluctuation and volatility behind the crypto. In other words, investments in crypto surely requires courage and determination, and certainly not for the faint-hearted people.
One such example for the aforementioned volatility and losses can be demonstrated from the fall in the prices of a single Litecoin back in 2017 when it slipped by greater than $300.
Another infamous example comes from Bitcoin which slipped beneath $4,000 during the beginning of 2019. However, it also hit a new all-time high of $41,940 per coin earlier this year. This shows how investments in the crypto can be both, very profitable as well as the other way around.
Other than the volatility, another major drawback of crypto is the possibility of scammers and frauds due to the absence of any regulatory authority in the crypto network.
Lastly, the big threat to the crypto holders is hacking. Investors and traders of crypto have the opportunity of trading online via online trading platforms. Investors and traders can trade on online exchanges via the internet on their smartphones and computer systems. These devices are exposed to the threat of attacks by hackers. Therefore, if someone gains access to your crypto, there’s not much you can do to reclaim it.
According to the aforementioned reasons and many others, a lot of experts and analysts suggest that Bitcoin and other cryptocurrencies are “the purview of speculators.” People should not consider buying Bitcoin or any other cryptocurrency as an investment, he says.
However, others believe that despite of the underlying speculation and risk, bitcoin may dominate the financial market in the upcoming years. No one knows for sure what is going to happen, but by the looks of it, it seems pretty evident that crypto is here to stay for a long time, and investing in it wouldn’t hurt the investor.