Making investments with your hard-earned money is always a little nerve-wracking. Even the safest of investments are a big leap, particularly when investing large sums of money are involved.
Nevertheless, as you probably already know, investing is a crucial step to diversifying your portfolio and creating wealth for yourself as the years go by.
One popular investment in 2021 is cryptocurrency. In this article we will explore why people invest in crypto, and the advantages and risks this type of investment presents to the investor. Let’s get started!
Why do people invest in cryptocurrency?
As a potential investor, it helps to know why this type of investment is so popular in this day and age.
Cryptocurrency, such as Bitcoin or Ethereum, are types of digital currency that can be bought and sold for profit by investors. There are plenty of uses for cryptocurrency, but the main point of buying crypto is, well, to make money from it in the future.
Investing in cryptocurrency has become a highly sought after investment over the years, because on the whole, crypto is steadily rising in value. Don’t be fooled, though – there is more to investing in cryptocurrency than buying, waiting for the value to increase, and selling.
The PROS of investing in cryptocurrency
Let’s take a look at some of the potential upsides of choosing to invest in crypto.
- You are likely to make money long term.
If you are interested in cryptocurrency and play the game long enough, just like with any investment such as property, you are likely to make money in the long term. This can take time, and requires knowledge and strategic thinking to pay off. To ensure you get the most out of your investment, be sure to speak with an investment advisor.
- Cryptocurrency is a transparent investment.
What do we mean by a transparent investment? Well, the rise of Bitcoin brought in a new age of transparent transactions that are viewable by both the parties involved, and non-participants. This removes the possibility of corruption in the investment process.
The CONS of investing in cryptocurrency
- The market is volatile.
The cryptocurrency market is notoriously volatile. Market volatility means that the value of cryptocurrency, with it being such a young form of currency, can swing dramatically from one end of the spectrum to the other. For example, the value of a Bitcoin in 2017 went from $975.70 to over $20,000 in under a year. This volatility can be risky if you are looking to make a steady income from crypto investments.
- Cybersecurity.
One of the biggest issues with cryptocurrency is cybersecurity. Hackers become more advanced by the day and considering that crypto is an entirely digital form of currency, the problems posed for investors are clear. There isn’t much security when compared to regular banking or property investments.
Final Thoughts
If you are searching for ways to invest your money in 2021, cryptocurrency could be a smart way of creating wealth. Use this guide to ensure you understand the advantages and risks of cryptocurrency investment.