Investing in Cryptocurrency: Advantages & Disadvantages  

Welcome to another episode on Crypto for Newbies. In our last episode, we showed you our Top 3 Cryptocurrency Exchanges. In this episode, we’ll treat another aspect of investing in cryptocurrency – the advantages and disadvantages. 

The cryptocurrency scene is a highly lucrative one. However, it is not without its drawbacks. A good investor considers all angles before committing money to a project. It is only fitting that you learn about the upsides and downsides of investing in cryptocurrency. 

Upsides of investing in cryptocurrency 

1. Added functionality 

Some cryptocurrencies, unlike equities, provide usefulness. Bitcoin can be used to pay for goods and services, for example. Other tokens may grant access to projects or provide discounts on the services provided by those initiatives. So, investing in cryptocurrency provides value on several fronts.

2. Potential for a return 

As cryptocurrency acceptance grows, it has delivered extraordinarily high returns. The majority of individuals feel that a good cryptocurrency investment yields a higher return than stocks.  

3. Diversification of portfolio 

Cryptocurrency’s value does not appear to be linked to the prices of stocks, bonds, or other asset classes. However, because bitcoin has only been around for about a decade, the data is limited. The price of crypto, on the other hand, is theoretically unrelated to the price of traditional assets. Wise investors can diversify their investment portfolio by investing in cryptocurrency. 

Downsides of investing in cryptocurrency 

1. Restrictive regulation 

Because the cryptocurrency business is unregulated, you won’t have the same safeguards as you would if you invested in the heavily regulated stock market.  

If your account is hacked, for example, you may lose all of your money with no way to recover it. There’s nothing you can do if the coin you invested in turns out to be a fraud. Increased regulation may also reduce demand for particular cryptocurrencies, putting the investment at risk.

2. Extreme volatility

Cryptocurrency prices can fluctuate dramatically from day to day. Some investors may find such large price swings difficult to bear.  

Bottom line 

If you’re considering investing in cryptocurrency, the points outlined above will help you make a final decision. If you’re an avid risk-taker, then a little volatility won’t deter you. You can invest in cryptocurrency and greatly reduce your vulnerability when you work smart. 

Stick around for the next episode where we write on the various types of cryptocurrency wallets.  

Follow Naija.fm on our social media handles Facebook, Instagram, and Twitter to keep up with trending news, breaking news, entertainment news.