Cryptocurrency can be a good investment if you are willing to accept that it is a high-risk bet that could pay off, but also that there is a big chance that you will lose all your money. Cryptocurrency is a good investment if you want to gain direct exposure to the demand for digital currency. A safer but potentially less lucrative alternative is to buy shares in companies with exposure to cryptocurrencies. Cryptocurrency is a relatively risky investment, no matter how you divide it.
Generally speaking, high-risk investments should make up a small part of your overall portfolio; a common pattern is no more than 10%. You may want to look first to shore up your retirement savings, pay off debt, or invest in less volatile funds composed of stocks and bonds. By historical standards, cryptocurrency has been a big investment. However, investing in cryptocurrencies is inherently riskier than other asset classes such as stocks, traditional commodities, and real estate.
Bitcoin aims to replace gold as a store of value, and Ethereum has the potential to disrupt the entire financial services industry. While ambitious, the growth potential of cryptocurrencies is unlike any other investment. In terms of advantages, Lovell says that cryptocurrencies provide consumers with more choice, independence and opportunities in their finances. In addition, the decentralized and open-source nature of cryptocurrency helps eliminate the weak points of the modern banking system by providing direct access to consumers, he says.
This makes it easy to buy, sell, store and trade the best-performing assets of the last decade. Edmund McCormack, founder of crypto investment platform DChained, says that this move was expected on behalf of PayPalpyPL, but that it was also necessary to introduce cryptocurrency into the mainstream. The biggest advantage of investing in cryptocurrencies than investing in cryptocurrencies is its bullish potential. Although investments in these companies can be profitable, they don't have the same upside potential as investing directly in cryptocurrencies.
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. For example, many short-term crypto investors invest in Dogecoin, which has no competitive advantage over other larger cryptocurrencies such as Bitcoin. Before investing in a cryptocurrency for the long term, make sure you understand what you are investing in. For every cryptocurrency you invest in, make sure you have an investment thesis on why that currency will stand the test of time.