The debate goes on: Investing in Crypto-currencies

Crypto-currencies are famous for the astronomical swelling in their value as well as unexpected free-falls. The profits which stock trading provides in a quarter can now be made through Bitcoin in a single month. On the flip side, they have extreme levels of volatility and risk built into them. While it is not generally recommended to flood all your savings into crypto-currency, putting the surplus savings into them and testing it through can help you stand a chance to earn greater returns.

The reasons why investing on Crypto-currencies are good:

  • Unbelievable returns: The percentage gains in Crypto-currencies are extremely hard to believe. If you were to invest $1000 on Bitcoins at the beginning of 2017, within the second quarter of the year, the investment would be quadrupled to $4000. Some ICO’s have seen more than 60,000 % rise in their value within a span of two years.
  • Seamless Transactions: Purchasing Bitcoin is much simpler than any other online financial transaction. If one decides to put some funds on the exponentially growing currency, it is as easy as a few clicks online.
  • Higher Liquidity: For the equity in a startup to turn into a profit, one has to hang on till the IPO or any acquisition occurs. But purchasing crypto-currencies makes it for much easier exchanges to dollars which in turn makes it highly liquid relative to any equity.
  • Clear Path of Investment: Investment in a startup say, has to bear through a lot of twists and turns till where it ends as a finished product. Thus, the environment in which the investment heads is unknown. But in the case of crypto-currencies, one can accurately evaluate the platform, the network of investment and use strong insights to predict performance.

The reasons why investing in crypto-currencies is not good:

  • Extremely Volatile: Stock trading itself is known for its ruthless nature when it comes to retaining investments. Bitcoin on the other hand is more than a hundred fold volatile as some dips in its value can wipe off large investments within minutes. Also, not to forget its vulnerability to hacking which has unfortunately, increased recently.
  • Competition: Bitcoin could be the only current player in the market known to majority of people, but even while the investment is in its infancy stage, a number of competitors have risen up against Bitcoin. Given the future potential of this currency, the competition is only likely to be higher leading to its lesser share in the market.
  • Mismanagement and lack of resources: If the ICO fails to raise money or incurs a financial loss, the crypto-currency network is damaged. Also if the team running the crypto-currency does not handle the business correctly, it can lead to potential loss in the market, thus devaluing the currency extremely.

The benefits of crypto-currencies are tempting as much as the disadvantages are scary. Before deciding to invest on Bitcoins or any other crypto-currencies, be sure of your investment plans and systems and also learn about the ICO, its background and how it is growing with time.

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