4 Things to Know Before Investing in cryptocurrencies
Currently, cryptocurrencies are on the rise to become a means of investment and a means of payment. No wonder, over time, cryptocurrencies continue to grow. Like when investing, cryptocurrencies also have a number of risks that must be known,Before knowing the risks of investing with crypto money, it’s good if you find out first what includes this digital money.
Launching The Financial Expresspage, Friday (14/1/2022), there are more than 10,000 cryptocurrencies currently available worldwide.
Some of the most well-known digital currencies are Bitcoin, Litecoin, Ethereum, Cardano, Dogecoin, Tron and Ripple.
Bitcoin is the first and largest virtual coin to control more than 40 percent of the total market value of all cryptocurrencies put together.
Because it is increasingly trending, here are 4 considerations if you want to participate in investing in crypto money.
- Decentralized and Irregular Cryptocurrency
Cryptocurrency is a decentralized network based on blockchain technology. Meanwhile, blockchain is an organizational method that ensures the integrity of transactional data.
That means basically, cryptocurrencies include a form of digital asset based on a network distributed across a large number of computers around the world. Due to its decentralized nature, cryptocurrency means it is beyond the control of governments and other authorities.
Currently, several governments and central banks are discussing regulating cryptocurrencies. In addition, while also trying to continue to exist in trade, investment, or technological innovation.
Since there are many cryptocurrencies available in the market, you should first learn them before investing in those digital assets.
- Easy to Change
Cryptocurrency prices are very volatile. They are traded for 24×7 all over the world. Meanwhile, there are often anonymous investors who manipulate the market in the absence of regulation.
For example, Bitcoin has looked very volatile in recent years. In mid-December 2017, the price of Bitcoin touched a high of up to $19,650 and nearly halved the following month.
In addition, when a pandemic hit the world market in 2020, Bitcoin dropped to $5,000 in March. It then strengthened again to more than USD 61,000 in March 2021.
If you are not comfortable with the extreme, you should stay away from cryptocurrencies. However, if you still want to invest in crypto, limit your exposure and buy only quality coins.
- A lot of speculation
As cryptocurrencies are still in the developing stage, some financial experts believe that cryptocurrencies will turn into a short-lived mode.
While some other financial experts argue that cryptocurrencies can disrupt the current financial system and bring changes to the new transaction system.
In addition, it is also possible that most cryptocurrencies will not survive, but there are also a handful of the best cryptocurrencies will survive.
There is uncertainty about various cryptocurrencyfacts. Some people use it as a currency, a means of payment, to invest.
- Prone to Cyber Attacks
Although based on highly secure blockchain technology, cryptocurrencies are potentially exposed to risks from cybersecurity threats.
Different parts of its ecosystem, such as exchanges that allow you to trade cryptocurrencies or digital wallets, may not be completely immune to cyber hackers. For example, in the case of Bitcoin, many online exchanges are infiltrated with the hacking and theft of millions of dollars’ worth of coins.
