Is it safe to invest in cryptocurrencies? Here is all you need to know
Cryptocurrencies are getting popular with every passing day all over the world. It has surged in the last few years. Most of the investors are trying their luck in the lucrative virtual coin trading space. As a result, lots of people are joining cryptocurrency exchanges all over the world. Over the past few years, lots of people have tried their luck in the world of cryptocurrency. That is why crypto exchanges are having rapid customer base growth than any other platform.
The ease of crypto trading attracts more investors to invest in their currency. Now the market capitalization is nearly 1.2 trillion US dollars. As a result, young investors are more likely to invest and place their bets on crypto assets. But still, a large number of individuals are hesitant to invest in the cryptocurrency space. The reason being that they are not sure about the reliability of cryptocurrencies. Let's understand it with the help of getting the answers to a few questions.
Is it Safe to Invest in Cryptocurrency?
Before investing in anything, we all need to make sure that it should be safe to invest. Therefore the same thing applies to cryptocurrencies. It is tricky to answer that it is safe because it is still an emerging asset. And still have limited use all over the world. It will take to gain widespread acceptance like equities, commodities, and mutual funds.
It is the most debated topic in the financial space whether investing in cryptocurrencies is safe or not. A large number of people are backing the decentralized digital currency. But, on the other hand, lots of people are still opposing it. Therefore there is still a mixed reaction of people about the credibility of cryptocurrency.
From the investment point of view, bitcoin is always a bit riskier than other kinds of investments. All cryptocurrencies are pretty similar to traditional assets. But the cryptocurrency faces high volatility. So it can be quite difficult to invest in cryptocurrency. A group of financial analysts has stated that wild price swings are more common in cryptocurrencies. The reason being that it is accepted by a specific group of people around the world.
And if someone stops accepting the crypto coin, then the price of that crypto coin goes down. But once cryptocurrency gets wider acceptance, then the rest will be more likely to reduce. Apart from that, the crypto space involves high risks and high rewards. No one knows which currency will provide high returns. And which one will give a considerable loss. Moreover, cryptocurrency is far more resulting than it appears to the investors.
Reliability of Cryptocurrency
Most people are not sure about its reliability. But the people who are investing in cryptocurrencies for the last few years are well aware of its reliability. WaziX CEO has highlighted that cryptocurrency survived two major global recessions and has also been around for over a decade. Apart from that, many cryptocurrencies gained more than 3x market capitalization in the past few years. It means that cryptocurrencies are growing at a faster pace than any other currencies. In addition, the demand for cryptocurrency went to the next level during the lockdown all over the world.
However, cryptocurrencies are reliable because they are not impacted by inflation. Apart from that, it has become an ideal alternative to gold that is a preferred choice for most people worldwide. In addition, cryptocurrencies have become legal in most countries. And it allows the individual to buy and sell virtual coins without any restriction or legal formalities. Moreover, cryptocurrencies are also a good option for a more extended period investment. It is highly suggested that the investors should do proper research before investing in it. However, it can't be there is always a risk with cryptocurrencies that can't be ignored.
Regulatory Hurdles, Possibility of Ban
Cryptocurrency is still lacking regulation in most countries. There are many reasons that the government cannot come up with a stand on cryptocurrency to regulate it. But most countries have already lifted the ban on the usage of cryptocurrencies. Now people can buy and sell cryptocurrencies all over the world. Most of the crypto exchanges have become legal in many countries around the world. But there is always a risk that the countries can ban cryptocurrency anytime. It is a decentralized currency, and it can be engaged in any illegal activities. If the government puts a complete ban on cryptocurrencies, then the investors can face heavy losses. But there is more chance that cryptocurrencies would be regulated in many countries.
What Have We Learned?
In the end, from the above discussion, it can be seen that investing in cryptocurrency is becoming safer. However, it can't be ignored that there is always the risk with cryptocurrencies, such as hacking, scams, and malware attacks. In many cases, the users also forgot their passwords, which became a reason for losing their cryptocurrency.