Investing in Cryptocurrency ?

Know what are Pros & Cons before you decide to invest your money

You may have heard about the new craze surrounding cryptocurrency nowadays. Some big names are openly coming out in support or against these digital currency. Bitcoin, Ethereum, and Litecoin are some of the more popular types today. You can think of them as digital cash that can be used to pay for goods or services no matter where the seller is located.

The most notable characteristic of cryptocurrency is that it isn’t controlled by one authority, like a government or financial institution. This decentralization is brought about by peer-to-peer transactions facilitated by blockchain technology, which confirms the processes involved in the transfers and records them in a ledger viewable by the public.

Let’s understand what are pros and cons of investing in these types of currency,

Pros

1. Transfer With Ease, Swiftness, and Security

This is fairly a new technology and it is making transactions very smooth. The process of transferring funds is straightforward. You just need to click on a few buttons and confirm the transaction. The payment can also be received in real-time because there are thousands of miners that process these computations.

Plus, it’s done through private and public keys, which ensure that each transaction is safe and secure.

2. Anonymity

While each transaction’s address, hash, blockchain number, and miner name are recorded in the ledger for all to see, the process of trading and transferring your digital assets is anonymous.

Unlike our banks which asks for too many details and also report transactions to external authorities, this is ideal if you are wary about giving out too many personal details online due to the high risk of identity theft.

3. Accessibility

Because there’s no central authority governing the transactions, you can trade cryptocurrency at any time of the day as long as another user is active. Peer-to-peer transfers can happen no matter where you and the recipient are in the world.

Cons

1. Volatility is High

Price fluctuation is a significant issue for cryptocurrencies. It may be due to the fact that it’s still relatively new and people tend to mistrust these intangible funds. Moreover, even though a single country or entity doesn’t govern it, news reports on major world events can affect a cryptocurrency’s price.

Volatility can be a disadvantage if you want to trade with low risks and gain considerable rewards in the long-term. However, you can look at it positively since this characteristic allows you to take advantage of the times when the price goes very low and buy lots of assets, which you can sell when the value increases after a short period.

2. Tricky Concept

The idea of cryptocurrency and how it works is very technical, which makes it challenging to understand for most people who aren’t experts in the field of technology.

Nonetheless, it’s possible to gain more knowledge on the subject as long as you put in the time and effort to study its ins and outs. Similar to traditional stock trading, you have to determine the factors that affect its price as well as learn how to read graphs and charts that can help you make the right investing decisions similar to stock market.

3. Theft Risks

Even though cryptocurrency is intangible, there’s still the possibility of theft through hacking. Hackers have sophisticated tools that they use to infiltrate cryptocurrency wallets and trading platforms to intercept transactions and send the funds their way. That’s why it’s crucial that you choose a secure exchange channel with measures in place to prevent this type of theft from happening.

You should also practice online safety habits like ensuring that the website you’re trading on has a secure connection. Another way to deter digital theft is to avoid sharing information to strangers and on shady sites.

4. Legal Boundations

In many countries cryptos are outrightly banned, In India still laws are not in place for cryptos. So there lies a huge risk if tomorrow the currency is banned in our country. It will be difficult to sale the holdings and get out of the game.

Conclusion :

Investing in cryptocurrency has become more straightforward because of the valuable trading software that’s available. I.e. Wazirx, Coinbase etc. Moreover, you also have complete control over your digital assets and can transfer funds to anyone, anywhere, and anytime anonymously because of its decentralized nature.

Meanwhile, the volatility of the market can be viewed as a disadvantage along with the challenging concept as well as the risks for theft through hacking.