Cryptocurrency has shown a massive potential to reshape the financial world. Since its introduction, cryptocurrency has come a long way and many global leaders have come forward in its support.
You can see people talking about cryptocurrencies and different ways of getting into them. Today, there are over 18,000 cryptocurrencies present in the market with Bitcoin (BTC) being the leading cryptocurrency.
But you need to develop a comprehensive understanding of cryptocurrency before buying it.
Cryptocurrency is not only just a currency that you can use in your daily routine. It also works like an asset in which you can invest money to earn profits.
So, let us find out what are the advantages and disadvantages of cryptocurrency that you should know.
What is Cryptocurrency?
Cryptocurrency can be defined as a digital currency that exists and is stored online. You can buy cryptocurrency through a crypto exchange by using your credit card or exchanging existing cryptocurrency – for instance, Bitcoin for Ethereum.
Crypto is based on a peer-to-peer network and is supported by blockchain technology. Cryptocurrency is highly secured, thanks to cryptography.
The transactions of cryptocurrency are unanimous and recorded on a public distributed ledger. The Bitcoin ledger ensures enhanced safety and profitability as compared to other cryptocurrencies.
Carl Runefelt, alias, The Moon, is a global crypto leader who is pushing for the mass adoption of cryptocurrency.
He says, “Bitcoin is the best hedge against inflation that we have in the world right now and Bitcoin is also the best form of money that we have and have maybe ever seen in the history of humans.”
Pros of Cryptocurrency
The popularity of cryptocurrency is rising with each passing day. More people are getting into crypto and making a lot of money.
Here are some of the pros of cryptocurrency.
You can see there are thousands of cryptocurrencies circulating in the market.
But all cryptocurrencies have one thing in common – the tendency to experience sudden hikes in value.
Cryptocurrency is not under any regulations which means it operates freely. You may make an investment of a few hundred dollars in a cryptocurrency, and in the next hour, it may rise to thousands of dollars.
Some of the benefits of cryptocurrency include the inherent safety of blockchain technology.
Cryptocurrency is highly secured by cryptography. Your information is stored online, and no hacker can access it entirely in one go.
According to Carl, “I know that for the fact that you cannot hack Bitcoin. You can hack exchanges which is something different but not Bitcoin. It is important to understand that you can hack YouTube, you can hack banks, or literally any internet company out there, but you cannot hack Bitcoin. This is because the blockchain is very robust.”
Freedom from Banks
Did you ever think about holding a currency that provides you freedom from hectic banking procedures?
Cryptocurrency is a decentralized currency which means that it operates free from the influence of a third party like a bank or government.
When you are making crypto transactions, there exist no intermediaries whatsoever.
Cons of Cryptocurrency
Where you are getting multiple benefits with cryptocurrency, there are certain challenges associated with it too.
Here are some of the cons of cryptocurrency.
Cryptocurrency is New to the Market
Fiat or traditional currency has been circulating across the world for centuries and people understand its concept.
Cryptocurrency, on the other hand, is relatively a new type of currency. It may take you a little longer to understand crypto comprehensively.
People investing in cryptocurrency without establishing its understanding, often suffer losses. Experts always advise that you should study crypto charts and never be emotional when investing in a cryptocurrency.
Cryptocurrency is Extremely Volatile
Regardless of all the hype that crypto is getting worldwide, it is often described as an unstable asset.
Cryptocurrency is extremely volatile, and your investment can go up and down within hours.
Instead of starting your investment in cryptocurrency with huge sums of money, you should go with small amounts which you can easily afford to lose.
Carl, on his YouTube channel, The Moon, says, “The price of bitcoin keeps changing every second, and for new investors, it is necessary to understand the reason behind these changes. Examining its history or the factors that influence the rise and fall of bitcoin, everything must be studied.”
Cryptocurrency is a Game of Patience
When you are investing in an asset like stocks, you may make quick profits in time.
But cryptocurrency is a game of patience.
Cryptocurrency is a long-term investment and making decisions based on short-term changes can hurt your returns.
The value of cryptocurrency is always changing. Your returns can go up one moment and can go down in the very next moment.
When facing such conditions, you should zoom out and look in the longer run.
Cryptocurrencies like Bitcoin have withstood the test of time and are now widely recognized as the best alternative to fiat.
Bitcoin has become the world’s largest cryptocurrency by market capitalization. If one Bitcoin is out of your reach, this does not mean that you cannot get into cryptocurrency as there are thousands of other cryptocurrencies present in the market.
But successful investment in cryptocurrency demands that you should devise a sound crypto investment strategy. You can read the above-mentioned pros and cons of cryptocurrency and decide what is the right time to get into the crypto market.