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The pros and cons of cryptocurrency investment

Friday, August 20, 2021

The essence of the nature of things is their constant change. In recent years, there have been global changes in all spheres of life and the economy, including the financial market, which has recently been supplemented by a new type of money - cryptocurrency. Along with this, the investment market received a new tool that you can use to invest and earn.

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Back in 2015 people understood digital coins, blockchain, tokens and ICOs poorly and had no trust in them since they were completely unaware of how it all works. It seemed unbelievable that this could be a profitable investment that allows you to make money. But in 2021 traders, brokers, investors and other participants in the financial market became convinced that a new era of virtual money has not only begun, but is also gaining momentum. That is why investments in cryptocurrency are attracting more and more interest. The new tool for making money and increasing capital has already shown itself on the stock exchanges and proved to the whole world that it is worth considering. Moreover, people who have started working with digital coins and tokens will tell you that cryptocurrency has established itself as a fairly successful investment. But it is still difficult to call virtual currency a long-term investment, and we will explain why below.

The investment market is part of the financial market structure. Investments are divided into long-term, medium-term and short-term ones. For example, real estate can be purchased and turned into a long-term deposit, or you can rent it out for three months while you are not in the country, so as to earn money rather than lose it. As of 2021, cryptocurrency is a short-term investment, although sometimes it reaches medium-term. But the situation with tokens is not so straightforward. If you decide to start investing money in several Non-Fungible Tokens that are converted into paintings by artists, musical compositions and other works of art, it can be safely considered a long-term investment.

Anyhow, as of 2021, cryptocurrency is still a young instrument both in the field of investments and in the financial market in general. So we will begin our analysis with why you should not invest real money in virtual currency.

  1. If you decide to start investing money in digital coins, you must be prepared for anything, because you can’t avoid the risk in any new undertaking. Since the day cryptocurrencies appeared, we have seen rapid ups and downs in bitcoin. And this is also the case with all digital coins and some tokens. It should be noted, though, that this does not concern NFT.

  2. Another important point is that cryptocurrency is very vulnerable. It is enough for a well-known person to publish just one post on a social network or say one word to the media, and the financial market instantly reacts. And this reaction can be both positive and negative. Remember Elon Musk? The precedent occurred in 2021, when, thanks to Musk’s tweet, Dogecoin first rose sharply by 1,500%, and some time later after another publication on the social network, DOGE exchange price collapsed.

  3. Some economists equate cryptocurrency with gambling, while others still consider it a bubble, not to mention that digital coins and tokens are not seen as a long-term investment. Indeed, there is so much fuss, so much news, so much talk about cryptocurrency that sometimes it all seems suspicious and alarming. So in a nutshell investing in cryptocurrency can provide an opportunity to make money quickly and lose everything even faster.

  4. Why have many people already invested in bitcoin and other digital coins, but have not become millionaires yet? Because they forgot their wallet password. It turned out to be a kind of long-term investment with no return or profit. Yes, cryptocurrency wallet passwords are very long, difficult to remember and easy to lose, but completely impossible to recover. This is not a bank that you can turn to if anything. Cryptocurrency is completely decentralized.

  5. Hackers are also on the alert — and by 2021 they began to pose an even greater threat in order to take over your data and steal investments that have by now multiplied. Cryptocurrency, of course, is better protected than a bank account, but cyberattacks are constantly improving and become so unpredictable and sophisticated that there is no point in guessing what experienced cybercriminals will do.

  6. Since the cryptocurrency is still young, you need to be prepared that sometimes there are issues with selling it according to the exchange rate. As simple as that: the server may crash, or there may not be enough “cash” at the exchange office. This of course will not be like that forever, but in 2021 situations like that still happen.

And now the bright side of the coin. Years passed, bitcoin and other digital coins in 2021 once again strengthened in the financial market and broke new records. This suggests that the new tool should not be underestimated. Cryptocurrency is just getting started, and the prospects, including for earning money and even long-term investments, are huge.

  1. Cryptocurrency is independent of the banking system, which means it dictates its own rules and lives its own life. Moreover, investing in digital coins and tokens has long been ahead of any bank in terms of protection and safety.

  2. Everyone knows any currency suffers from inflation, be it the US dollar or the Swiss franc, but this is not the case with cryptocurrency. Investing in digital coins means avoiding inflation risk.

  3. Cryptocurrency has great potential. What we see in 2021 is just the beginning. Just look at how the digital world and IT has developed. It pretty much confirms that e-currency is the future. Investment in cryptocurrency is a long-term investment that can provide extra innovative earnings. It’s also a new player in the financial market that is developing by leaps and bounds. Chances are, in the near future the cryptocurrency will show long-term growth.

If you do decide to start investing in digital coins or tokens in 2021 in order to earn money, make sure to not invest all your capital! If your savings are negligible, it is better not to invest at all. Besides, keep in mind that the financial market is cruel and merciless, and it takes the nerves of steel to make money there. Remember that the most unexpected and sharp jumps and falls on exchanges occur with cryptocurrency. Nevertheless, the risk of investment can be justified, provided that you behave like a cold-blooded investor, pay no attention to anyone or anything, and rely only on your mind and intuition. We recommend that you completely immerse yourself in the world of cryptocurrency, carefully study the information, analyze the data obtained, draw conclusions, follow the news and keep your finger on the pulse.

20 Aug 2021

 

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