What is Cryptocurrency?
Cryptocurrency are digital currencies that does not physically exist and are used as a medium of exchange to verify the transfer of funds. They operate independent of banks and uses strong cryptography to secure financial transactions.
Cryptocurrencies in the recent past has gain lot of recognition and popularity among investors as a way to make some money. However investing in crytocurrency does not come without any risk. Here are some pros and cons of investing in cryptocurrency.
Though trading using cytocurrency is relatively new, it is growing in popularity. Some major institutions and banks have recognized crytocurrencies especially bitcoin as a legal tender.
This will only mean the value of major cryptocurrencies such as bitcoin, ethereum and litecoin, have the potential to grow with further in coming years.
Cryptocurrency provides a more faster way of transfering of funds independent of banks and other third party payment systems. As a result of this, you find a more and more online retailers accepting cryptocurrency as a trading currency.
Altcoins or the so called other digital coins other than bitcoins have mostly shown a positive trends in recent past. Investors who buy them wisely and early might end up selling them with big profits later on.
Cryptocurrency prices are extremely volatile. The average Bitcoin price at the start was around $0.01 dollars in 2009 went up to high of $20,000 in early 2018 and dropped back to $9,000 currently. The price of Bitcoin fluctuates regularly. As an investor you should know when to buy and when to sell. There is always this risk, as many investors have lost lot of money with bad decisions on their timing.
Even though the trading using cytocurrency offers security, the main responsilbility of securing your cryptocurrency are totally dependent on you. Every sender of cyptocurrency have a private key. You are totaly responsible for keeping that private key safe. If online hacker find the key, they have total access to your cryptocurrency. Plenty of cryptocurrency hacks have happened recently due to bad individual security flaws.
Though many financial regulators are beginning to embrace this technology, there are some who, have not yet. For example the recent South Korean treat of banning cryptocurrency trading as left many south korean investors to sell cyptocurrencies in to huge volume. As result of this, the value of bitcoin and other altcoins plunged drastically.
Like any investment, there is always the risk of failure. Before investing in cryptocurrency make sure to properly analize your cyptocurrency and where you expect the value of the cryptocurrency to be in future.