Nowadays, “cryptocurrency” is a hot topic. People around the world earn thousands, if not millions, of dollars by investing in these digital tokens. However, the potential returns involve greater risk and volatility. Before investing in cryptocurrency, you definitely need time to conduct your own research.
Below are listed six things, both good and bad about investing in these digital assets.
1. Good: potential returns.
Every day you hear crazy stories about how people make money with cryptocurrency. If you invested $ 1,000 in bitcoin in 2013, it will cost more than $ 400,000 today. Several alternative coins (altcoins), which recently jumped into the top 10 tokens for market capitalization, increased by 1000 percent over the months.
2. Poorly: inexperienced team.
Each cryptocurrency is, in fact, a startup that creates a product to solve a particular problem.
Cryptocurrencies are quite new. A lot of teams with little experience. As with startup, if the command is not properly managed, the entire project may collapse. The majority of projects will include information about the team. A quick LinkedIn search can show a lot about their experience.
3. Good: liquidity.
When you invest in an asset like a startup, your money can be locked away for years to come. You are stuck if there are no purchases or the company is not purchased. If you invest in cryptocurrencies, your investments are quite liquid.
With cryptocurrency, you can buy and sell “on the fly”. Markets are open 24 hours a day and seven days a week.
4. Bad: technical difficulties.
The hardest thing people can understand when it comes to cryptocurrency is it’s all digital. You can equate almost any other investment to something physical, but you can’t take bitcoin in hand.
Given that these assets are fully digital, you are often subject to technical difficulties. Markets and exchanges can run slowly when they are busy. Withdrawals are often disabled for certain tokens when the network is overloaded.
5. Good: transparency.
This salt. You can’t know the full picture. Most of the cryptocurrencies will provide detailed information (a long document explaining the project and technology) and other relevant materials. They usually include the road map, the team members.
The code is usually available in Github for others to publicly check it out. A bad sign when a company is inactive in Github.
6. Bad: safety.
Security is one of the biggest drawbacks of cryptocurrency. Exchanges were hacked, lost millions of digital tokens. Those who kept their coins on these exchanges, has lost almost everything.
Cryptocurrencies are not insured, and will not be in the near future. You should be careful when it comes to buying, selling and storing these coins.
It is recommended to use a cold storage wallet that allows you to manage your private keys. Your secret key is what allows you to access your coin on the block chain. It is best to keep this key offline and in a safe place. For mining, you can use the innovative miner machine asics 9
Investing in cryptocurrencies is very risky. Markets are unstable, and technology is still quite young. However, they are still a great opportunity for anyone interested in investing. Treat them the same as any investment, and please do your own research.