Investing in cryptocurrency good or bad

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One of the top questions people usually ask is whether or not Cryptocurrency is indeed a good investment. The answer to this question is quite tricky because it could be a good investment, or it could not. Cryptocurrency can either get you filthy rich or you could also end up losing your money. Just like any other investment, crypto assets come with lots of risks, but also plenty of potential rewards.

However, without a doubt, Cryptocurrency is a great investment, especially if you want to acquire direct exposure to the demand for digital currency. Want to know how good or bad this investment is? Continue reading this piece. Is Cryptocurrency safe? There are a number of risks associated with holding and investing in cryptocurrencies. For instance, crypto exchanges have been quite vulnerable to hacks and other criminal activities.

These security violations have led to significant losses for several investors who have had their digital currencies stolen. The risks of trading cryptocurrencies are mainly related to their volatility. They are high-risk and speculative, and it is important that you understand the risks before you start trading.

Some of the other reasons why Cryptocurrency is a risky investment are: Volatile in nature Susceptible to error and hacking: Can be affected by forks or discontinuation Risks associated with investment in cryptocurrency Experimental phase risk It should be noted that the concept of cryptocurrencies itself is innovative. There are no historical data and experience that allow you to assess how much you can trust it. Bitcoin, like other cryptocurrencies, is still under development.

Due to the ambitious goals of the upgrade, there is a higher probability of code bugs and failures through the implementation of Ethereum 2. Price variability Cryptocurrency cost fluctuations are completely unpredictable in the short term. It adds to the riskiness of this asset. Financial analysts can more or less accurately predict the value of real currencies or stock quotes based on data from the outside world.

On Tuesday, cryptocurrency prices recovered after plunging sharply on Sunday. But anyone who has been investing in cryptocurrencies will tell you that drastic price movements are normal in the cryptos and may increase as prices continue to rise. The market for cryptocurrencies was almost non-existent a decade ago when Bitcoin, the first virtual coin, emerged. While Bitcoin was hitting all these milestones, it faced severe periods of volatility.

Though it is far from replacing traditional currency , it has gained traction among younger investors over the past few years. The year was particularly important for cryptocurrencies as valuations rose sharply in the middle of the coronavirus pandemic.

One of the main reason why investors were lured towards virtual coins last year was weakness in traditional assets across the globe. Some analysts even termed as the breakthrough year for cryptocurrencies, adding that the price boom observed last year is different from previous instances.

For instance, wild price fluctuations that are frequent in the crypto trading space now have an underlying reason — be it a tweet from a big shot crypto backer or a country enforcing regulatory actions. This is the reason why there is still no concrete explanation behind the insane rise in the price of Bitcoin in and the subsequent plunge within a year.

Another reason why cryptocurrency trading has become more accessible is the fact that there are more crypto exchanges around the world. People can easily create an account using their phone and start investing. Some crypto-dedicated apps even allow investors to make portfolios, which helps in diversifying assets. This will help investors invest in a pool of cryptocurrencies, giving them a chance to maximise their earnings while reducing overall risk. Even with the advantages, the benefits of cryptocurrencies trade are outweighed by a few critical hurdles.

However, there are some critical problems that prevent cryptocurrencies from becoming a favourable asset class. One of the biggest problems is the absence of concrete regulations.