Advantages and disadvantages of investing in cryptocurrencies

invest in cryptocurrencies

Surely you have seen out of curiosity how much some cryptocurrencies are worth. Maybe you have friends who have invested their savings in buy Bitcoin and now they have recovered their investment and everything else. Or maybe they have lost everything. And it is that, When it comes to investing in cryptocurrencies, everything has its advantages and disadvantages.

But what are these? Is it really worth investing or is it better not to approach it? We want to give you information on this topic so that you can know what risks you face and the possibilities you have. Go for it?

Cryptocurrencies and how they work

cryptocurrency finance

Before delving into the advantages and disadvantages of cryptocurrencies, it is important that you know well what this term refers to. It is a digital currency, created solely and exclusively to survive in the digital world. The function it has is to be able to carry out monetary exchanges through blockchain technology, where all operations are recorded in a secure and transparent manner.

In their day, these virtual currencies were created to offer a payment method that was not under the control of governments. Of all that there are, the best known is Bitcoin, a currency that has suffered many variations in money and that is both rising and falling.

But how do they work? As we have told you before, These currencies work through blockchain technology, where transactions are recorded, and may even be anonymous (up to a limit). The value of these cryptocurrencies will depend on supply and demand. And the supply of coins is always limited, and that means that it is demand that causes their value to rise or fall.

Investing in cryptocurrencies, is it a good idea?

keyboard and mobile with blockchain word

Let's put things on the table. If you have considered investing in cryptocurrencies it is because you think that by making an investment you can earn a lot. But is it really like that? Can you invest without knowing about the subject?

The answer to that question is no, don't even try. The professionals themselves, who know a lot about the subject, face daily losses (or profits) without their experience and knowledge helping them 100%, so it is not as safe as other options.

It's true that you win sometimes. But it is also lost.

Advantages of investing in cryptocurrencies

Imagine the case that you have decided to invest in digital currencies. Do you want to know what advantages you are going to find?

Security

This has a lot to do with the blockchain technology that we told you about before. All operations that have been carried out are recorded in a file that is practically impossible to edit or for hackers to get hold of it.

You don't have intermediaries

It's not like banks, or private agents, where you have to depend on them to invest, withdraw the money and pay them. Here the intermediaries "are conspicuous by their absence."

Immediate operations

Many times, when you go to a bank to make an operation, it takes a while for it to be reflected, or they have to study it. The same is not true with cryptocurrencies. If you want to do an operation with them you will do it instantly (it will go from one to the other immediately).

Avoid inflation

This is one of the advantages of cryptocurrencies that must be taken with a grain of salt. Not all currencies limit issuance, but those that do so do avoid inflation by ensuring that its value is not devalued.

Volatility

If you like the topic of cryptocurrencies, you will know that some go through periods of sudden peaks, that is, the currency rises a lot in value. For example, going from 35000 euros to 100000 euros in a short time.

Of course, Just as they rise like foam, they also fall catastrophically.

If you are good with patterns or have inside information, you can surely anticipate these streaks, benefiting (because the investment is often recovered and much more).

Global currency

Cryptocurrencies are actually international currencies, which means that you can work with them anywhere in the world (as a payment method). And since you do not have government control, it is much easier for you to work with them without losing money.

Disadvantages

computers and graphics devices

Although the advantages offer you an investment that has no apparent risks, the truth is that this is not the case.

One of the advantages we have told you about is its volatility. That is, being able to earn money if you invest at the right time. But, Just as you can win a lot of money, you can also lose it all.

There is no doubt that there is a high investment risk because we are talking about digital currencies that are not controlled by the government, and that do not have any type of guarantee if they scam you or if you invest at a bad time.

To this you must add that not everyone operates with cryptocurrencies as a means of payment. In some countries it is true that they are even official currency; But in others they barely use them, and at a commercial level there are very few online stores that allow you to make payments with them.

The fact that there is no control over the government does not mean that it escapes it. Many countries are beginning to impose limitations on its use, or even taxes, which indirectly means that they do have some control. And not only to manage them, but because we are talking about a currency that, although digital, requires great energy and enormous spending on pollution to achieve it.

Despite having been in cryptocurrencies for a long time, it is still a market in the testing phase. What does that mean? That long-term profitability cannot be guaranteed.

To make it clearer, it is true that Bitcoin is the oldest cryptocurrency, dating back to 2008. And you may think that it is already old. But There are stock exchanges with more than 400 years of history, which compared to the years of this virtual currency, make it still very inexperienced and therefore it is not known how it will act in the future.

Now that you know some of the advantages and disadvantages, you can get an idea of ​​whether it is a good decision to invest or not. What we do recommend is that, if you decide to invest in cryptocurrencies, you do so with professionals and companies that are truly reliable. Have you done this before?


Leave a Comment

Your email address will not be published. Required fields are marked with *

*

*

  1. Responsible for the data: Miguel Ángel Gatón
  2. Purpose of the data: Control SPAM, comment management.
  3. Legitimation: Your consent
  4. Communication of the data: The data will not be communicated to third parties except by legal obligation.
  5. Data storage: Database hosted by Occentus Networks (EU)
  6. Rights: At any time you can limit, recover and delete your information.