Is Cryptocurrency Worth Investing in for the Long Term?
Cryptocurrency seems like a lucrative investment due to its potential to make you rich overnight! This digital form of money has offered profits to many early investors, leading to multiple success stories that attract us towards Bitcoin, Ethereum, or Binance Coin.
Cryptocurrency offers high profit rates and secure transactions. It does not rely on conventional financial institutes or traditional economic trends. However, before you invest your savings into this virtual currency, it is important for you to know that its rates fluctuate frequently. While your profit graph may be soaring one week, it can drastically fall the very next day.
Is cryptocurrency worth investing in for the long term? Let’s explore the factors you should consider before making an investment in digital coins.
High Profit Returns
The most attractive benefit of cryptocurrency investment is its potential for high profit returns. The success of Bitcoin is a classic example of how profitable the virtual currency is. Launched in 2009, the value of Bitcoin soared from a few cents to a whopping $60,000 per coin over a period of 12 years.
One reason that helps cryptocurrency value to shoot up is the limited amount of virtual coins. We call it the scarcity model – a strategy that leads to increased demand, consequently causing a spike in prices.
Over the recent years, cryptocurrency has gained attention from some big investment parties, such as the market giant Tesla. This further increases its value and demand, making it a profitable investment for individuals.
Security and Transparency
What makes cryptocurrency transactions secure and transparent is the blockchain technology. It is like a virtual accounts register that records all cryptocurrency transactions taking place around the globe.
The best part is that this register is not controlled by a central authority, such as the government or a conventional bank. Instead, the transactions are recorded across a network of multiple computers in a community of users. As a result, it is hard for hackers or scammers to tamper with this data. It requires permission from multiple users in the community to alter the data.
The same technology makes the transactions transparent. As a member of the blockchain network, you can see the transactions that cause value fluctuations in the cryptocurrency you invest in.
So, with a low risk of hacking and scamming, it is worthwhile to consider cryptocurrency as a long-term investment.
An Alternate Investment Plan
Cryptocurrency offers to broaden your investment portfolio. This virtual currency is not influenced by the conventional financial market. So, if the stock market is going down or there is a slump in the property sector, it will not affect your cryptocurrency rates.
Additionally, cryptocurrency does not rely on financial institutes like banks. It is not controlled by the government. So, if there is an economic downfall in your country, there will be no impact on your cryptocurrency investment.
Moreover, traditional markets usually have specific trading hours. The cryptocurrency market, on the other hand, is operating 24 hours a day. This offers you flexibility for buying and selling at your convenience. At the same time, the constant market availability of virtual currency means you have sufficient time for smart decision making and adaptability to market changes for your transactions.
So, while you may invest your savings in banks, property or stocks, having an alternate investment plan in the form of cryptocurrency will be beneficial in the long term.
Fluctuating Rates
Although cryptocurrency is a profitable trade, the graph is not always going up. There are often unexpected ups and downs. We call this frequent change of value over a short period of time volatility. So, this volatile nature of the currency adds risk to your investment.
Cryptocurrency is also vulnerable to several factors, such as social media influence. Negative comments or news on platforms like Twitter can affect how people see this investment. As a result, there may be a reduction in the trade of virtual currency following a recent social media controversy.
Regulatory Issues
Government decisions and laws have a significant impact on cryptocurrency investments. These laws might change over time, affecting how businesses can use virtual currency. Moreover, government taxes can also affect your overall profit.
In some regions, governments might restrict or completely ban certain cryptocurrency activities. In such cases, you might end up with a substantial loss.
It is important for you to keep yourself up-to-date with the changing government policies and regulations regarding cryptocurrency. These laws have a significant impact on the security and legality of your transactions.
Final Thoughts
Digital currency is a good investment as it widens your investment portfolio and offers high profit rates. However, there are several risks involved. The currency is quite volatile and vulnerable to factors like social media influence and government regulations.
Considering all the pros and cons, a smart move would be not to invest all your savings into cryptocurrency. Consider it an alternate investment plan so that your risks are minimum.