For those who are not much into the world of investments and finance, the first query in their mind would be what exactly is cryptocurrency? It’s a natural question in the minds of those who are not well-versed with the concept of online currencies. But if you are an avid financer in online currencies, you wouldn’t have to ponder much over it as you know very well about it and elaborate it properly.
The cryptocurrency Bitcoin has been making the news all year long for its seemingly meteoric rise in the market. Its amazing increase in value is evident in the rise of its value from $1000 per Bitcoin at the start of this year to staggering $17,000 per one Bitcoin currently. And going buy its phenomenal rise, we should not be surprised to see if it hovers around $20,000 per Bitcoin sometime soon. In fact, some expert analysts and investors have even made a prediction that going by current trends, its value can touch $100,000 mark in coming 3-4 years. Sounds quite a lucrative prospect to investors and shareholders alike, doesn’t it?
So it brings us to this inevitable question, Does one should invest in cryptocurrency? This blog is composed with an intention to provide readers with a fair and unbiased insight into investing in Bitcoin. Like anything else, this investment also has its share of pros and cons. Let’s read more about both so that we can have a proper understanding of this mode of investment.
Pros of Investing In Cryptocurrency
- Bitcoin has a lower inflation risk as compared to other global currencies. It is because world currencies are regulated by their respective state governments and this can lead to variation in the value of currencies as governments keep printing more money. When the value of currency lowers in the market, its purchasing power goes down, which often results in shelling out more cash to buy products. With Bitcoin, it is more of an infinite system as it is a digital currency that has negligible chances of finishing. It is estimated that by the end of the year 2050, one Bitcoin will be able to cater to 500 people all over the globe. What future holds cannot be predicted, but as far as current times are concerned it seems safer and secure than print currency.
- Bitcoin investors have a strong sense of belief that this digital currency has a reduced falling risk as compared to other currencies. And their belief is backed by the fact that this is a global currency that is not dependent on government policy that can cause demonetization, hyperinflation.
- Buyers cannot claim to have their money back after they’ve made a purchase, sellers have an added advantage of selling their products and services without any concern of facing recover claims from the buyers.
- Bitcoin is incredibly easy to move around when compared to other world currencies that can be difficult to carry around due to large amounts of cash. There are several risks that accompany carrying hefty cash, due to which Bitcoin seems to be gaining acceptance amongst investors for its portable feature. With Bitcoin, you can carry millions of dollars with such an ease that you won’t even realize that you are carrying millions of dollars in one memory card! That’s quite convenient, doesn’t it?
- Another benefit of Bitcoin is that it cannot be traced. Buyer can’t get his money back once he has given it to the seller. This is vital because the government will not be able to keep track of your funds.
Keeping aside the Pros of investing in Bitcoin aside, let us now move on to the Risks of it to present a complete picture to the readers and potential investors. Read on to know more about it.
Risks of Investing in Cryptocurrency
- No 100% safety net or way has been developed as yet which can guarantee protection from human errors and technical glitches. An article published in the UK edition of Wired has stated that 18 of 40 web-based businesses that offered the exchange of bitcoins into other fiat currencies have shut down their operations due to inability to reimburse their customers.
- Bitcoins can face a possibility of an enactment of stringent regulations by law enforcement agencies because they can decide in future that it is turning into a safe way of ‘’giant money laundering”. If such a situation happens, it can lead to a great reduction in the currency’s value.
- Bitcoins have been found excessively volatile with 7.5 times as volatile as gold, and more than 8 times as volatile as the S&P500. Such volatile price movements in short time-frame are not considered as an ideal exchange medium for both buyers and sellers.
In the crux, as mentioned above, there is a strong possibility of windfall gains as well as potential risks that relate to investment in cryptocurrency. You can take the calculated risk right now or choose to wait for some time to see if it is only an initial boom or more sustained and progressive investment medium.