Investment In Cryptocurrency- Is The New Age Digital Currency Worth It?

Cryptocurrency

It is possible to get rich by your investments in cryptocurrency. You can also lose all your portfolio money. Are you wondering how both can be true?

Investments in cryptocurrencies are risky but can be a potential goldmine for you too. Cryptocurrency investments can fetch you higher returns if you gain access to the demand for digital currency. The other safer bet can be to invest in companies that have exposure to cryptocurrencies.

Let us take a look at the positive factors and deterrents of your cryptocurrency investment.

The Risks

Similar to the stock exchanges, the cryptocurrency exchanges are also vulnerable to becoming targets or getting hacked. The security breaches have often led to a quantifiable loss for the investors whose digital currencies got stolen.

The safe storage of cryptocurrencies is more complex than owning any bonds or stocks. Cryptocurrency exchanges like Coinbase make it very easy to trade cryptocurrencies like Bitcoin or Ethereum. However, many people do not want to keep their digital assets on exchanges because of the above risks.

Cold storage options like paper wallets or hardware are in demand by some cryptocurrency owners. Offline cold storage options come with their own set of challenges, and the biggest risk is losing your private key. In the absence of a private key, it is practically impossible to get access to your cryptocurrencies.

There are no assurances that the cryptocurrency in which you are investing will surely succeed. There is fierce competition among the various cryptocurrencies, and scams are also very prevalent in this industry. Only a handful of cryptocurrencies help make money for the investors.

The absence of regulation in most countries has led cryptos to flourish. The regulators will start to monitor the industry, especially when they view cryptos as a threat rather than an innovative technology.

The foundation of cryptocurrencies is set on a  cutting-edge technology that increases the risk manifold. The majority of the technology is still under development and is yet to prove its metal under extensive real-world scenarios.

It is worth mentioning that there are companies that can help in crypto scam recovery. They can ensure that the victims of scams have the guidance to make their case and put forth their conditions. They also help to pursue the case until the money is back in the victim’s account. Their proven track record of such entities helps ensure the victims of the success that lies ahead.

The Adoption

The blockchain industry and cryptocurrencies exchanges are constantly showing robust growth even after the inherent risks. The much-awaited financial infrastructures are in place, and investors now have access to institution-grade services. The availability of tools and techniques to safeguard and manage crypto assets is driving the demand among individual and professional investors.

The establishment of the cryptocurrency futures market is aiding many institutional investors to have direct exposure in this sector. The ease of usage propelled by financial giants like PayPal and Square is making it easier for retail investors. The cumulative investment by Square and other companies in digital assets is in the range of hundreds of millions of dollars. Tesla recently invested $ 1.5 billion in Bitcoin.

Although various factors impact the cryptocurrency risks, the increased adoption rates show signs of maturity in the industry. Companies and individual investors are looking to get direct exposure to this digital currency, considering it a safe platform for investing large sums of money.

Long-Term Investment

Numerous cryptocurrencies came into existence in the market with a lofty goal. Such objectives by prominent names like Bitcoin and Etherium may get achieved over a long period. However, the success of any cryptocurrency can never be quantifiable unless it achieves the desired goal.

Investors get heavily rewarded over a longer horizon when an investment starts to achieve the pre-decided milestones from its inception. It is also worth considering that widespread adoption must happen for any cryptocurrency to achieve its long-term success.

So to summarise, investing in cryptocurrencies with caution can lead to higher returns for you in the long term. However, it is also crucial for you to dig deeper and find out the objectives that are set by the cryptocurrency projects during their inception. These pieces of information will give you an idea of the success rates of your selected cryptocurrency. 

The presence of entities that help to recover money from fraudsters nowadays is also aiding many people. Such entities help the retail investors to get back the trust which they lacked before.

The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.