In a short 10 years, cryptocurrency has gone from something only tech junkies were concerned about to something all leading investors are talking about. Unfortunately, the popularity of cryptocurrency comes from its fame and infamy in equal measure. Some say it is the asset of the century, while others claim it is a bubble that will pop soon. It is these conflicting opinions that confuse most people. Is cryptocurrency a good or bad investment? Although we can’t provide you with a definitive answer to that question, we can give you all the information you need so you can make an informed investment decision.
What is Cryptocurrency
You can’t invest in what you don’t understand and a vast majority don’t have a clear understanding of cryptocurrency. Cryptocurrency is a decentralized digital exchange medium used in the purchase of goods and services online. The core of cryptocurrency is blockchain technology, which is a decentralized online ledger. Of course, this is just the bare-bones definition and you should look into it further if you want to invest. That is particularly so when it comes to blockchain technology.
Why Would Anyone Invest Cryptocurrency?
Before you make your decision, it is important to look into why other people are so bent on investing in cryptocurrency. What benefits can you get from such a move and what makes cryptocurrency so popular?
We live in an information age where confidentiality, which, while convenient, means that privacy is dead. In this day and age, any information on your transactions and assets is exposed in one way or the other. Your information is just keystrokes away from being published on the internet. While that may be a little alarmist, it is also the reality we live in. However, cryptocurrency offers the anonymity that we so desire, and that is a massive draw for a lot of people out there. Thanks to blockchain, the information on your crypto transactions is entirely anonymous. In fact, since crypto wallets aren’t registered in any identifiable format, you can keep everything about you, including whether you even have cryptocurrency, confidential.
Cyber threats are the scourge of the century. Cyber threats are constantly evolving and growing more sophisticated, which threatens any business you conduct online. Unfortunately, it is impossible to ignore the convenience of online business, which means that you have to increase your cybersecurity measures. Of course, the expenses of such a move are enormous. The alternative is to use cryptocurrency. We are not saying that cryptocurrency is 100% secure. In fact, there have been cases of cryptocurrency hacking over the years. However, it is one of the most secure methods of transaction available. The very nature of blockchain guarantees your cybersecurity. Additionally, the cybersecurity risks associated with cryptocurrency are easily manageable. For instance, it is imperative that you keep your private key a secret and in so doing maintain the security and privacy of your crypto wallet.
There aren’t that many assets where you can confidently claim to hold sole ownership. However, the situation is very different for cryptocurrency. Since it is almost impossible to even know whether you own cryptocurrency, then everything you hold with you is your own property. Keep in mind that cryptocurrency is decentralized, so no one can claim it from you for whatever reason.
Thanks to blockchain, cryptocurrency is one of the most popular decentralized digital assets. That means that there isn’t a centralized governing body for cryptocurrency. You can trade it, mine it, or even invest it as you please without worrying about some governing body affecting its growth.
What are the Challenges of Investing in Cryptocurrency?
Stability is the key to any investment. Unfortunately, in the years since its inception cryptocurrency hasn’t shown a whole lot of stability. There is some truth to the claims that cryptocurrency is a bubble waiting to pop. The best example of this is Bitcoin. Bitcoin is the first-ever cryptocurrency to be introduced to the world, and it is also the standard. Unfortunately, it also proves the point that cryptocurrency can be quite volatile as an investment. In December 2017, the price per Bitcoin was about $ 20,000. However, in December 2018, the price per Bitcoin was about $ 3,000.
Is cryptocurrency legal? The answer to that question is situational. Cryptocurrency is legal in some countries and banned in others. However, that isn’t even the most pressing concern. In the event that you have a complaint, where should you go? The entire system is set up to guarantee anonymity, and the only proof of ownership is your crypto wallet. If you lose your wallet, or more specifically your private key, then you’ve lost access to your cryptocurrency.
Another concern that potential cryptocurrency investors have to deal with is cryptocurrency scams. There are thousands of cryptocurrencies that have popped up over the years with the sole purpose behind their establishment being to defraud unsuspecting investors. The problem with cryptocurrency as an industry is that it lacks a system to guarantee the authenticity of cryptocurrencies. Sure, the developers can issue a statement and set up a system of checks and balances, but whether the currency succeeds or fails is all up in the air. Not every cryptocurrency can be the next Bitcoin, Ethereum, or Litecoin.
As mentioned, cyber threats are constantly evolving. Cryptocurrency is a highly secure digital asset, that much is true. However, that doesn’t mean that there aren’t cybersecurity risks to be wary about. One of the most obvious weaknesses of cryptocurrency is the private key. If the key is compromised, so too is your entire crypto account.
As with any investment, there are risks and rewards associated with a crypto investment. However, in the case of cryptocurrency, as this article shows, the risks and rewards are more pronounced. Fortunately, while you are making a decision on whether to invest in cryptocurrency, you can go on to invest in blockchain, which is a technology that shows significant investment promise.
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