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Today, discussions around cryptocurrency dominate the financial industry. From financial gurus to tech companies and even celebrities. Everyone wants a piece of digital currency. The frenzy to acquire cryptocurrency is somewhat akin to the gold rush of years past.
But is the hype around cryptocurrencies fact-based. Or are you better off not investing in this market? Here are the facts about digital currency and how you can make a level-headed decision about it.
Cryptocurrency: The Pros
It Has Real Potential
No matter what the naysayers think, there is no denying that there is real potential in cryptocurrency. After all, most cryptocurrencies are currently valued at tens if not hundreds of thousands of dollars. Nothing spells potential better than this.
It is easy to see the allure of digital currencies. For one, these are democratized currencies. There is not a single institution or government that can influence the value of these coins. The factors of supply and demand rule the cryptocurrency world. Which spells security for some people.
Additionally, cryptocurrencies thrive on scarcity. For instance, there can only ever be 21 million bitcoins. With time, the currency value will only go up because there is a limit on how much of it there can be.
Additionally, digital currency is exceptionally liquid. Buying or selling things using cryptocurrency is a quick and seamless affair. Meaning you can transact with it from any part of the world.
It is Gaining Legitimacy
Nothing proves that digital currencies are set to become mainstream currencies. Than the recent acceptance by PayPal of Bitcoin as a payment form. With a nod of approval from this giant company, it is only a matter of time before Ethereum tokens, Bitcoin. As well as other cryptocurrencies gain acceptance globally.
Additionally, the inception of crypto-based credit cards. Like the BlockFi Bitcoin reward system. Is propelling this currency’s acceptance. If people can buy things using a crypto-based credit card. They certainly won’t hesitate to use the coins in their day-to-day lives.
Digital Currency; The Cons
Although cryptocurrency has a bright future, it still is a risky investment. The lack of government regulation, which is the very thing that makes it extremely appealing to users. Is its Achilles Heel.
Unlike stocks and bonds with a set of guidelines. People invest in cryptocurrency on their own terms. Should one party break the terms, the other has no recourse.
The lack of ordinary market regulation. Also means that the value of the cryptocurrency fluctuates a lot. For any investor, this spells high risk and exposure.
Additionally, cryptocurrencies are vulnerable to hackers and other cybercriminals. You could lose your investment altogether if these criminals invade your wallet.
So, Who Should Invest in Cryptocurrency?
Cryptocurrency is a high-risk, high-reward kind of investment. This makes it ideal for people who are financially stable, out of debt. Or with an emergency fund and other diversified investments. If you fit this category, then you may consider investing in digital currency.
Whether or not you should invest in cryptocurrency. Depends a lot on your current financial status. Although digital currency has high potential and is set to grow exponentially over the next few years. It also carries high risk. Be cautious in your investment. But don’t be afraid to take opportunities when they present.