Cryptocurrency, as we all know, is the new hype for investors. For those who don’t know what crypto or cryptocurrency is, well, simply put, it is the parallel of paper money, but in the digital world. It is the new digital money. And just like you use the physical currency to purchase goods and services, lend or borrow it, you can do the same with digital currency, which is the star of this blog, cryptocurrency. But before investing in such a new asset, every investor has totally out a list of pros and cons before they can come to a rational conclusion. This blog helps you to consider all that cryptocurrency has to offer, with both its advantages and disadvantages so that you can make a better choice for yourself.
Advantages of cryptocurrency
Let’s first start with the bright side of cryptocurrency. Being a recent and most definitely a staying invention, it comes with its own set of pros which are discussed as follows:
High potential for high rewards:
One thing you should know about cryptocurrency- it is a very volatile investment. It is subjected to sharp and sudden spikes in value. Although it is true in the case of drops, too if you plan to invest in crypto, this is one aspect that can give you returns manifold to what you invest. For example, the price of Ethereum roughly doubled from July 2021 to December 2021!
The Blockchain technology underlying cryptocurrency:
Blockchain is the decentralized data-storage ledger that tracks every transaction taken on the platform. It is this structure supporting the cryptocurrency that makes a plus point in investing. You make an entry once in the blockchain. You stay there forever. The decentralized feature that tends to worry us actually might give an edge to this digital currency. Especially when you know that no hacker can access the entire chain in a single go, protecting your money.
A Transparent financial system:
In contrast to third-party mediated transactions, blockchain offers you an alternative. Blockchain and crypto can be viewed by anyone, anywhere, and the best part is you get to make direct transactions, eliminating the middlemen for good.
Disadvantages of cryptocurrency:
Just like every other thing, cryptocurrency has its own share of cons, and before deciding whether to invest in them, it is good for one to carefully assess the disadvantages too, which are discussed below:
It Takes Time and Effort:
- For people expecting returns as quick as a google search result page loading time, this might come as a disappointment. Investing in crypto, learning about it, and getting returns is a process that needs time and patience. So, you have to enter the market having realistic expectations.
Beginners beware of security risks:
- One thing that beginners need to consider is that though blockchain is a pretty safe platform, it cannot be so in some cases, especially for newbies. As a cryptocurrency owner, you could lose the private key that lets your coins- and along with it, unfortunately, you might lose all of your holdings too. Not to mention instances of hacking, phishing, and all other frauds. Why beginners? Because they are new to this system, they automatically become more vulnerable to such threats.
They are not a long-term investment-Yet:
Cryptocurrency, though a craze these days, have been in existence for 10 years. As opposed to traditional banking systems, they are still budding. Hence, though we can say surely that banks are there for a good amount of time, we cannot say the same for crypto. There you have a brief description of some of the pros and cons of crypto. The list goes on even beyond the blog, but I hope that you could at least find your starting point and know what to look for further. For more information on such topics, don’t forget to check our other blogs.
Read Also: B for Beginners, B for Bitcoin