Cryptocurrency is evolving as the new digital currency of the world. Based on blockchain technology, cryptocurrencies are increasingly gaining acceptance with more and more people.
With its increasing popularity, more and more people are getting attracted to and investing in cryptocurrency.
Investing in Cryptocurrency
Before you start investing in cryptocurrency, make sure to understand the technology. Be aware of both of its sides, positives and risks.
Cryptocurrencies bring a lot of advantages and disadvantages, too, along with themselves for investing in it. We will here decode some of the advantages and disadvantages too regarding investing in cryptocurrency.
Apart from investment, cryptocurrencies are also being used for car finance for bad credit from direct lenders.
These will help you understand why you should invest and the risks involved in investing and trading in cryptocurrency.
Advantages of Cryptocurrency
Safety from Frauds or Scams
Cryptocurrency is based on a decentralized ledger. This means that there isn’t any central place or system which holds the information regarding the transactions. Hence the possibility of any fraud and scam happening is absolutely nil.
The payment can never be declined with cryptocurrency transactions. While in other mediums like online banking, credit cards, or gift cards, the payment could be declined for multiple reasons.
With cryptocurrency, once payment is made, it always reaches the receiver and is too quickly.
Anonymity is maintained
While making purchases from a retailer, you share your credit card to make the payment. To use the credit card, you provide your pin code. Is this process safe enough? Not only your pin-code, the other details such as your name etc., are also shared with the retailer.
This isn’t the case with cryptocurrency transactions. For any payment, you do not need to share your private key with anyone. Even your details, such as your name and other details, remain private. Only your web wallet’s address is used to make or receive the transactions.
The transactions are 100% encrypted so that you remain anonymous. Hence zero chances of information leakage.
Cryptocurrency is the best method for making anonymous transactions. You can even make your monthly installment of loans taken with no credit check by direct lenders in UK.
Ownership Transfer is Secure and Immediate
Having any cryptocurrency in your digital wallet is your asset. You own it. You can transfer this ownership (means sell the currency) to anyone you wish to without any need for approval.
There isn’t any regulatory body to monitor the transactions. Hence for any transfer, you only need to provide the web wallet of the receiver, and the transaction happens. There isn’t any fee attached. The transaction is super quick, hassle-free and has no paperwork.
Whereas the other financial transactions related to asset ownership require a lot of paperwork and require time to process and shift the ownership. Even there is a commission fee attached to it.
Disadvantages of Cryptocurrency
Illegal financial transactions are possible
There is no regulatory authority of the government involved in cryptocurrency. Hence illegal payments and activities can happen through cryptocurrency over the internet.
Such as payments to illegal activities, ransom demands etc., can be done in cryptocurrencies.
Because of no authority, no government can stop it or permanently ban it even though the government and authorities are putting restrictions on cryptocurrency transactions but couldn’t stop it entirely.
High Risk of Loss
If any mishap happens, it is solely your risk. Since there isn’t any regulatory body, you cannot take you to complain to anyone. Prevention is the only possible way to safeguard your asset. If you lose your coins, there is no way to get them back.
This is because of the nature of the currency itself. Decentralization, anonymity and independence – hence once a transaction is done (by mistake or by force), it cannot be reversed.
If you face any issue, unfortunately, you can’t make a report against it anywhere. Hence, there are higher chances of losses.
The risk continues to hover till the governments approve of the usage of cryptocurrency. You need to be well familiarized with the current policies regarding cryptocurrency in your country. Hence the risks become even higher.
Cryptocurrency Market is Highly Volatile
The cryptocurrency brings a lot of volatility with itself. The price valuation depends on the demand and supply of cryptocurrencies. A lot of speculation drives the pricing of coins.
The estimation of the value graph for cryptocurrency hence becomes very difficult to predict. Therefore you would not know if the prices are going to soar or tank. And to what quantum.
Hence you need to be ready for all the situations when dealing with cryptocurrency investment.
Cryptocurrency investing is becoming a popular and high return option. But with high returns comes high risks. Investing and reaping high profits is alluring, but understanding the benefits and risks is even more important.
Being aware of risks will allow you to be more planned and cautious about any challenges or losses.