The Good, Bad and Worst of Investing in Cryptocurrencies

Investing in cryptos can be confusing and intimidating for a newcomer. While the dream of going from rags-to-riches will drive you to these coins, the fear of losing everything you worked hard for will force you to take a step back. There is so much of criticism and debate about cryptos that it becomes necessary to know what the good, the bad, and the ugly of crypto investing are.

What is Good about Crypto Investing?

  • If you look at the Bitcoin, for instance, you will see that it has gone through major ups and downs in all the years after its launch in 2009. Interestingly, the coin had been flying high even in the midst of the global pandemic. Bitcoin trading has increased, especially with the availability and easy access of various trading bots out there. Those trading bots can be viewed at site. This shows that it can be a safe haven asset when all other investments have been crashing.
  • Recently, Bitcoin prices may have suddenly come crashing down with Elon Musk’s tweets about environmental degradation triggered by crypto mining and China’s crackdown on cryptos. News events and big tech decisions can send coin prices in a tizzy. But for those who have been in the crypto market for long, this is a regular phenomenon. Prices which fall drastically have been seen to have bounced back soon afterwards.
  • Potential returns from cryptos can be huge. There are many stories of people having turned millionaires by investing in cryptos. Even altcoins that have climbed onto the list of top-ranking token in terms of market cap are giving back good returns.
  • Cryptos assure us of high liquidity. Unlike investing in startups where your money gets locked in for a while, with cryptos you can get back cash whenever you need it. it is possible to buy and sell coins on-the-go via exchanges and trading apps.

What is Bad about Crypto Investing?

  • Cryptos are like startups for building products meant to solve certain issues. They are new and although they are backed by teams of developers, many of them have limited experiences and expertise in the crypto space. Similar to a startup, the teams need to be properly managed; else, the project will collapse.
  • The biggest disadvantage of investing in cryptos is that these are digital based upon technologies like the blockchain that can be hard to understand. Unlike other investments, there are no physical assets that you can hold onto. Since it is completely digitalized, there are bound to be glitches. Exchanges face downtime when there is a lot of traffic.

What is the Worst about Crypto Investing?

  • While cryptos had been introduced to make money-transfer across borders smoother and safer, security still remains questionable. Many exchanges have been hacked in the past leading to insurmountable losses for users.
  • Since cryptos are not FDIC-insured and will not be any time soon, you must exercise a lot of caution when it comes to investing in these.
  • Cryptos are manipulated and prices are driven by market sentiments. If there is no guarantee of stability, consumers will not be keen to use it. Not only have cryptos been used for buying illicit weapons and drugs but people find it of no use since mainstream adoption is still far away.

Knowing these different facets of crypto investing can help you make a rational decision.