There has been a lot of discussion on cryptocurrency in recent years, as this form of digital money becomes more popular all over the world. This form of currency can be used to purchase products and services, even though it’s not something that exists physically – they’re completely virtual. Just like if you’re looking to make returns on your physical savings, you can also invest your cryptocurrency to make a profit. It is argued that with cryptocurrency being riskier, there is more of a chance of making a profit.
It is important to look at investment insights before deciding to invest in cryptocurrency – if you’re interested in cryptocurrency but don’t know where to start, read on for some insight into investing in this new, ‘virtual’ money.
What is cryptocurrency?
At first glance, cryptocurrency can seem confusing, futuristic, and too technical for a beginner, but it doesn’t have to be. Cryptocurrency is sometimes described as ‘digital money’ – which in some respects is true, but it can be explained in further detail which makes it easier to see why investors find it appealing. Crypto is a system of value. It is defined as a ‘digital currency in which transactions are verified and maintained by a decentralised system that used cryptography’.
As you may be aware, currencies like bitcoin are becoming more popular and are used as an outlet for wealth because funds can’t be restricted. Currently, more companies are accepting Bitcoin as a method of payment as cryptocurrency becomes more popular.
If you’re thinking about investing in bitcoin, we’ll look at some advantages and disadvantages that you may need to consider. But first, here are a few of the basics you should know before diving into the world of investing and cryptocurrency. Before you can begin investing, you must consider which cryptocurrencies are becoming popular or climbing quickly – Bitcoin and Litecoin are examples of crypto that are popular because of their accessibility, however, new currency emerges weekly, so it’s worth doing your research. Cryptocurrency is highly volatile, so getting comfortable with fluctuation means you won’t be caught off guard.
Advantages of cryptocurrency
Here are a few potential advantages and disadvantages to consider if you’re thinking of investing in cryptocurrency.
- Potential for profit – As previously mentioned, cryptocurrency is volatile and therefore comes with more of a risk, because of this, investing may lead to higher returns for well-researched crypto investors
- Tips and Tricks – There are a variety of websites that can help beginners when it comes to deciding if investing in cryptocurrency is the correct decision for you. They are helpful when it comes to researching the basics and learning more about definitions and trading tips
- Options – If you do decide that cryptocurrency is right for you, there are a range of brokers and exchanges available to help, whether you’re looking for micro-investments or if you’re investing large funds
Disadvantages of cryptocurrency
And with the pros, come the cons. Here are a few disadvantages to help you weigh up whether this form of investing is the right one for you.
- Volatile and risky – When it comes to investing, the higher the risk, the higher the reward. However, investing in cryptocurrency may mean making a loss due to its unpredictable nature. If you’re thinking of investing large amounts of money, crypto may put you at risk of losing a lot of cash
- Rules and regulations – In the UK, the government hasn’t yet ruled anything strict against investing in cryptocurrency, however that does not mean to say they won’t in the future. Because of this possibility, the value of crypto may fall.