Is cryptocurrency a good investment?
Is cryptocurrency a good investment? It is possible to get filthy rich investing in cryptocurrencies – but it’s also very possible that you lose all your money. Investing in crypto assets is risky, but if you do it correctly and as part of a diversified portfolio they can be a good investment.
Cryptocurrency is a good investment if you want to get a direct glimpse of the demand for digital currency. A safer but potentially less profitable alternative is buying stocks of companies with cryptocurrency exposure.
Is cryptocurrency safe ?
Multiple factors suggest that cryptocurrency is not always a safe investment. Meanwhile, other signs are emerging that the cryptocurrency is here to stay.
The dangers of a corrupt currency
It’s more difficult to store cryptocurrencies safely than owning stocks or bonds. Cryptocurrency exchanges such as Coinbase (Nes Deck: COIN) Bitcoin make buying and selling crypto assets quite easy as well as Bitcoin) CRYPTO: BTC (and Ethereum). CRYPTO: ETH , but many people let any company have access to their assets. Don’t like putting your digital assets on exchange because of the risks of allowing them to take over.
Scoring cryptocurrencies on a central exchange means you don’t have complete control over your assets. The exchange can freeze your assets, or the exchange can go bankrupt and you will have no support to receive your money.
Some cryptocurrency owners prefer offline
“cold storage” options like hardware wallets, but cold storage brings its own set of challenges. The biggest risk is losing your private key. Without the key, it is impossible to access your secret currency.
There is also no guarantee that the crypto project you invest in will succeed. Competition is fierce among thousands of blockchain projects, and many projects are no more than scams. Only a small percentage of cryptocurrency projects will eventually come to fruition.
Regulators could also break the entire crypto industry, especially if governments perceive cryptocurrency instead of modern technology as a threat.
Innovative technology elements of cryptocurrency also increase risk for investors. Most of the tech is still being developed and has not yet been massively proven in real world scenarios.
The adoption of cryptocurrency
Despite the risks, the cryptocurrency and blockchain industry is going strong. Much-needed financial infrastructure is being built, and investors are succeeding in gaining rapid access to services in institution-grade delivery. Professional and individual investors are slowly getting the tools they need to manage and protect their crypto assets.
Crypto futures markets are forming, and many companies are gaining direct exposure in the cryptocurrency sector. Financial companies such as Block (NYSE: SQ) and PayPal (NASDAQ: PYPL) are making it easier to buy and sell cryptocurrency on their popular platforms. Other companies, including Block, have invested hundreds of millions of dollars into bitcoin and other digital assets. Tesla (NesDeck: TSLA) to purchase Bitcoin worth $1.5 billion in early 2021. As of February 2022, the electric vehicle maker reported to have possession of approximately $2 billion in corrupt currency.
Microstrategy (NASDAQ: MSTR) – a business intelligence software company – to be collecting bitcoin since 2020. It held $5.7 billion in cryptocurrencies by the end of 2021 and said it intends to buy more than the extra cash generated from the operations.
While other factors still impact cryptocurrency risk, the growing pace of adoption is a sign of the industry’s resilience. Individual investors and companies have been trying to get direct exposure for cryptocurrencies, considering it’s safe enough for large-money investments.
Is crypto a long-term investment?
For any cryptocurrency project, however, it is necessary to be considered a long-term success in order to achieve widespread adoption.
Bitcoin’s supply has been kept at less than 21 million coins, while most currencies can be printed at the will of central bankers. Many investors expect Bitcoin’s price to rise as fiat currencies recede.
Those who are bullies about Bitcoin being used as a massive digital currency think it has the potential to actually become the first global currency.
As a long term investment
Ethereum is the native coin of the Ethereum platform and can be bought by investors looking to gain portfolio exposure for Ethereum. Although Bitcoin can be seen as digital gold, Ethereum is building a global computing platform that supports a massive ecosystem of many other cryptocurrencies and cryptocurrency applications (“dapps”).
The large number of cryptocurrencies built on the Ethereum platform, as well as the open source nature of DEPs, create opportunities for Ethereum to leverage and sustain the network’s impact for Ethereum, long-term value. The Ethereum platform enables the use of “smart contracts”, which are automatically implemented based on the terms written directly in the contract code.
The Ethereum network collects Ether from customers in exchange for implementing smart contracts. Smart contract technology has the remarkable ability to disrupt large-scale industries such as real estate and banking and create entirely new markets.
As the Ethereum platform grows rapidly into use worldwide, the Ethereum Token grows in utility and value. Investors are bulling over the long-term potential of the Ethereum platform to profit directly by owning Ether.
That’s not to say Ethereum isn’t competition. Multiple “Ethereum colors, including Solana, Polygon, CRYPTO: AVAX, and Crypto: SOL, are all designed to handle smart contracts and use blockchain systems capable of handling more transactions per second.
Yes. Less expensive for speed consumers also has the added advantage.
Should you invest in cryptocurrency?
Owning some cryptocurrencies can add diversification to your portfolio as cryptocurrencies such as Bitcoin have historically shown some correlation in prices with the U.S. stock market. If you believe that the use of cryptocurrency will expand rapidly over time, then it probably makes sense for you to buy some crypto direct as part of a diversified portfolio.
For every cryptocurrency you invest in, be sure to know why that currency will stand the test of time. If you do your research and learn as much as you can about investing in cryptocurrencies, you should be able to manage investment risk as part of your overall portfolio.
If buying cryptocurrency seems too risky, you might want to consider other ways to potentially profit from the rise of cryptocurrencies. You can buy stocks of companies like Coinbase, Block, and PayPal, or you can invest in exchanges like CME Group (NASDAQ: CME), which facilitates crypto futures trading.