With the world plunging into an economic crisis after the Covid-19 pandemic, many investors seek to make more money. The conventional means of investing money in stocks and shares is still an option today; however, it hasn’t been profitable lately. The pandemic has devastated many supply chain industries, leading to limited access to raw materials and conduct business activities.
Luckily, digital currencies have rapidly grown to prominence under these dire conditions despite their unpredictability and unstable nature.
Today, investing in cryptocurrency has proven quite profitable for many retail and established investors. Digital currencies such as Bitcoin and Ethereum provide a much higher payout, whether you are buying or selling commodities or simply trading them securely. Not to mention that banks or governments do not regulate these digital currencies, thus making the transaction process a breeze. However, before you end up investing in cryptocurrency, here are a few things that you should know.
Cryptocurrencies are Risky
Digital currencies have taken the world by surprise due to their enticing payout. In 2017, one unit of Bitcoin was worth $19,800. Although these figures promise to draw the attention of many investors worldwide, the digital currency market is extremely unpredictable. Established investors who invest in cryptos believe that amateur investors should only consider investing an amount they are happy to lose.
You can find many tales of investors earning millions via cryptocurrency transactions, but they come at great risk. Investing in cryptos untimely can result in huge losses. Therefore, you must invest wisely and timely to ensure your digital currency doesn’t go to waste.
Luckily, the process of buying digital currency is quite simple. All you need to do is learn how to buy Ethereum or Bitcoin or any other currency, which you can easily do so from various websites. These websites deal with cryptos, and you can buy them via credit card transactions.
The use of Cryptocurrency can Vary
Before you make up your mind to invest in cryptocurrency, you should know that cryptocurrency is known to sponsor illegal transactions. Because there is no regulatory body involved, such as a bank or government, the digital currency transactions remain a secret between the buyer and seller. Not to mention that only an owner with secluded encryption to the digital wallet can access the digital assets.
Moreover, you can freely make digital transactions via cryptos without worrying about authorities or your funding getting frozen. Although cryptocurrency encourages many illegal transactions, it also has several legal uses. For instance, numerous businesses worldwide accept digital currency for business payments. Similarly, many people prefer cryptos for international financial transactions due to their quick and low-cost transaction fees.
Emotions can Drive Cryptocurrency Prices
It is without a doubt that cryptocurrency prices are driven by emotions. Many amateur investors time their digital investments poorly, leading to extreme losses. It is often the case that when a token starts revolving in the market, there is an urge to invest.
As a result, many investors invest without critically analyzing the situation and mourning their lost value. In some cases, investors also invest in digital currency out of their Fear of Missing Out (FOMO). If you can resist this feeling, you might make a wiser decision and save your money from going to waste. Instead, you can wait for another opportune time and make a fortune.
You can Lose Your Cryptocurrency
Although cryptos promise maximum security when it comes to online transactions, it’s not always the case. Cryptocurrencies are intangible and lack a regulatory body to manage their transaction or storage. There is a possibility that you might lose your digital balance from your account. For instance, a power outage in your area or a computer crash without any backup can wipe out your stockpile of cryptos.
In addition, there are some reports where people lost their private keys to their digital wallets. In that case, the cryptos you own are irrecoverable. Likewise, scammers can also hack the mobile account that you use for stashing and transacting cryptocurrency.
Some of them mimic themselves as account holders, while others contact network carriers and request the transfer of the victim’s SIM card to another device. This way, these scammers can get access to your cryptocurrency accounts. Therefore, it is advisable to use your wallet from a reputed firm while ensuring you back up your cryptocurrency keys and using strong encryptions.
Choose the Right Digital Currency
No one can guarantee the future of cryptocurrency. While it may be profitable for now, it is hard to predict its standing in the upcoming years. The cryptocurrency market is highly unstable, and the chances of it crashing down always exist. Therefore, you must choose and invest in the right digital currency that promises some stability.
Today, Bitcoin and Ethereum are among the two most popular digital currencies. Although quite a few options are available, these two currencies have been trading at a relatively higher price. Investors who seek fast riches usually opt for these two currencies as they are well-known in the cryptocurrency market. But since all digital currencies share a different market, it is wise to learn about each market and its previous and current trends.
Cryptocurrency isn’t Legal Everywhere
While many investors worldwide benefit from cryptocurrency investments, some countries do not welcome such investments at all. For instance, in the US, the Internal Revenue Service doesn’t consider cryptocurrency as a currency. Instead, it deems cryptocurrency as property. Not to mention its taxation laws that discourage people from investing in cryptos via steep penalties and extensive record-keeping constraints.
Similarly, there are other countries as well that have adopted a no-tolerance policy for cryptocurrency. Because cryptos have a reputation for illegal use, many governments hesitate to encourage digital currency transactions. On top of that, without a governing body to manage cryptocurrency transactions, there are increased chances of misuse and people losing their hard-earned money. So, before you invest in cryptos, ensure that your country’s government gives you the go-ahead.
Investing in cryptocurrency has been the new norm for investors for the past few years. Despite its volatile nature and high instability, investors seek it as an opportunity to fast riches. But if it’s your first time investing in cryptocurrency, you should be aware of the volatility, misuse, and cybersecurity threats that digital currency presents. Knowledge is power, as they say. Knowing how to invest and what to invest in is your gateway to a good investment.