Factors to Consider Before Investing in Cryptocurrency

As a new form of digital money, there are factors to consider before investing in cryptocurrency. Unlike a traditional bank, the process is decentralized. No central authority or governing bodies monitor the transaction; thus, each currency has a different way of working. Currently, you can use the currency to exchange goods and services, withdraw the currency to your bank account, and invest in digital platforms.

Firstly, it is important to conduct thorough research on the types of cryptocurrency. Bitcoin, Litecoin, Ethereum, Ripple, Bitcoin Cash, Ethereum Classic, Zcash, Stellar Lumen are some of the well-known cryptocurrency available. Each has its own characteristics and it’s always handy to know how it works. For example, Bitcoin is using blockchain technology and users can conduct peer-to-peer transactions where the user can choose to provide “private key” to decrypt the process. In addition, the value of cryptocurrencies is volatile, so be mindful of the drastic change in the value.

Next, investing in cryptocurrency can be very risky. As mentioned previously that nobody has full knowledge of the system. Many are trying to establish their root on this topic since it is new. From investment to the creation of technology to make this system more mainstream, the possibility is endless. As an investor, this can be troublesome since it is hard to make a projection from this investment. There is an unclear rate of investment and the risk of catching fraudulent activity is high due to the lack of monitoring from the governing bodies. The lack of policies within this sphere might be a setback since there is no clear way of resolving the problem. On the contrary, there are countless possibilities to discover from investing in this cryptocurrency.

investing in cryptocurrency
investing in cryptocurrency

The saying of “never put one egg in one basket” can be very useful when thinking of investing in cryptocurrency. The sheer amount of currencies available to choose can be an opportunity to try and error. Monitor the value of the different types of cryptocurrencies and be mindful. The surge in 2017 where the value of Bitcoin rose nearly US$ 20,000 might sway some newcomers to trust this currency. The next wave of surge might be on the horizon however but there are many up and coming currencies under development that you can look into like Libra from Facebook as an alternative.

To sums up, investing in cryptocurrency is very tricky, requires a deep understanding of the system, and has a strong mentality to lose the bet. The system is new and not many have a full understanding of how it works. The fact that the system does not have a governing body should be a factor to consider when investing in using this system. There are many potential risks that might occur and the lack of policies to counter an issue. It is important to lose the investment value due to market volatility. The ongoing development in the cryptocurrency sphere provides many potentials, therefore conducting research is important to identify the potential and setbacks that might arise.

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