Cryptocurrency is a type of digital asset that is an intangible digital currency that uses a highly sophisticated type of encryption called cryptography to secure and verify transactions, as well as to control the creation of new units of currency. I think it's a mistake to call them currency right now, to keep calling them currency because they are crypto assets. It's not something that people use for transactional purposes on a regular basis. Because when it comes to currencies, you want something that holds its value predictably.
Investing in crypto assets is highly speculative. Market value can fluctuate a lot in short periods of time and is affected by things like media hype and investor sentiment. Noting that Apple has more cash on its balance sheet than the entire crypto industry has in market capitalization, BitMEX founder Arthur Hayes says that cryptocurrencies have not yet achieved asset class status in themselves. If you're considering an investment opportunity involving crypto assets, you may be wondering if it's legal, if it's right for you, or even if it could be a scam.
The ease with which you can access crypto assets means that it is essential to have a way of managing them, similar to the way you would manage traditional investments in a portfolio. It's easier to use a crypto asset management application that allows you to track your traditional investments simultaneously. Crypto asset management is the practice of buying and selling digital assets that will be used as investments while managing a portfolio to experience overall value growth. For every cryptocurrency you invest in, make sure you have an investment thesis on why that currency will stand the test of time.
If you do your research and learn as much as possible about investing in cryptocurrencies, you should be able to manage investment risk as part of your overall portfolio. Although investments in these companies can be profitable, they don't have the same upside potential as investing directly in cryptocurrencies. If one of your investment companies starts with Bitcoin on the balance sheet, for example, you could exchange that asset on a decentralized platform for a token that represents your interests in that investment. Crypto assets can rise and fall at different rates and over different periods of time, so by investing in several different products you can isolate yourself to some extent from losses in one of your holdings.
Several established exchanges and financial firms have launched crypto products, including Fidelity's recent announcement of a cryptocurrency trading platform.
