If you know about cryptocurrency or have invested in it, you are probably aware of the fact that it has not been doing great for a while now. However, there was also a time when people were actually making huge profits through this particular industry and have benefitted greatly from it. So, what is the verdict? Should you be investing in this or not?
Our Opinion On Cryptocurrencies
We want to start our blog by saying that investing in cryptocurrency comes with its own set of pros and cons and we are neither with or against investing in crypto. But as a financial advisor, we do have a few point of views we would like to get across to our readers.
Cryptocurrency is a gray area that many people choose do not talk about or give an opinion over. It is important, though, that you do understand what it entails.
How Does Cryptocurrency Work?
Cryptocurrency is a digital, encrypted currency which falls into the unregulated side of investing. They do not have any means of central issuing and there is no authority that that manages or controls it operations.
Cryptocurrency is used as a means of investment, or to make different payments involving stocks, goods, and even different brand services. All in all, this seems like a good investment option. So, what’s the catch?
Is Cryptocurrency Profitable?
In all honesty, we have seen a lot of people profit from crypto. People have actually made fortunes through this. Did you know that Terrance Leonard, a software engineer from Washington D.C. bought his $650,000 dream home through cryptocurrency? He already had a row home but dreamt of a bigger one with a yard for his dog to play in too.
His investments in crypto is what got him the house he had wanted for so long. But how did he achieve that? He looked at the long term advantages of crypto and invested in coins that showed a greater profit margin than the rest.
This goes without saying that not everyone will be able to buy a house, but crypto has reaped great rewards for many people who have given it a chance.
It Is Not All Rainbows And Sunshine
While cryptocurrency has proved to be beneficial for many people, there are others who have faced some losses as well. We would just like to say here that with every investment capable of providing huge profits also poses a huge risk of loss.
Risk and reward go hand in hand, especially when it comes to crypto. As a financial advisor, we like to keep track of why certain coins go up or down and why all this happens. However, the world of cryptocurrency is highly complicated and it is very difficult to tell what the actual cause of rising or falling coins is.
Sometimes it is a tweet from Elon Musk, while sometimes its investors who want to drive the price of a certain coin up, and sometimes it’s just a simple case of supply and demand. But this is the whole reason why investing in crypto involves so much risk.
Even though the story of Terrance Leonard is quite intriguing, there are hundreds of stories of people losing money through this as well.
Should You Invest In Cryptocurrency?
The answer to this is quite complex. Have you ever heard of the saying “Do not put all your eggs in one basket”? Well, we completely agree to it. So, if you want the answer of a financial advisor regarding this, we would advise you to keep other investment options open too. Do not invest all of your money into crypto. Put some into safe investments as well. Plus, if you invest a huge chunk of money into crypto, do not invest it all in the same coin.
Another thing we would recommend is that you invest only as much as you can afford to lose. If you are a businessman, for example, with a huge amount of money, investing some of it will not hurt you even if you suffer a loss. However, if you are a student wanting to invest your student loans or tuition fees to make more money, it is better to be careful while treading down the crypto road. Because you have nothing to back yourself on.
The Final Verdict
Crypto can be a challenging but rewarding investment option. Do a thorough research before you choose to invest in it and keep in mind that fluctuation sin cryptocurrency may affect the market either for the good and the bad and you need to be prepared for that.
With so much technological advancements, new and innovative means are being found in various fields and industries. Whether crypto will drive economies and be the future of currency is yet to be known.