Seeing the hype that has grown so much about cryptocurrency, you are probably asking yourself, should I invest in cryptocurrency? There are many things to weigh before you even make a decision, and as always, it is essential to be adequately informed. Cryptocurrency is relatively very new and it can be hard to understand the technology behind it completely.
We don’t know whether people can use it for fraud or not since the decentralized nature of the currency makes it easy to get duped if you are not well informed. In this article we will examine cryptocurrency investments and whether they are sound financial decisions or mere gambles.
Investing in Crypto in 2022
Even experts are still not agreeing on whether cryptocurrency is good to invest in. Some predict it to keep rising. In contrast, others expect it to fall in 2022. The crypto market is unstable and hasn’t settled yet. This means that whenever you invest in cryptocurrency, you should try to keep it below 5% of your total investment portfolio. There is so much volatility associated with cryptocurrency that most advisors say it is not considered a safe investment.
This year, cryptocurrency has undergone a rocky journey, but this short-term volatility does not impact the long-term growth. You can invest in crypto in 2022 if you are in it for the long run, where the volatility will not affect you as much.
New networks such as Ethereum are also picking up pace and have been said to be cheaper and faster than the other traditional cryptocurrency networks. Playing a steady investment game for the long run is recommended for most investors owing to the current volatility. Acting rapidly in response to any of the price swings will result in the loss of your investment. Therefor you must be ready to hold the course and remain steady for a long time.
What Are The Risks?
Volatility is the main reason why the cryptocurrency is known to have such high risks. That is why you should know the risks before making serious investments in the currency. To begin with, cryptocurrency is very volatile, and any unforeseen changes in market sentiment can lead to sharp movements in price. Cryptocurrency has been known to drop by hundreds and even thousands of dollars.
Another reason the crypto business is risky is because they are a decentralized and unregulated currency. Central banks and governments cannot determine the right way to govern the currency, which makes a lot of people uncertain of the future when it comes to investing in crypto.
Their digital nature also makes them susceptible to errors and hacking. Glitches and other technical problems can lead to entire market crashes, and hackers can also take advantage of unpatched vulnerabilities on the network.
Forks and discontinuations also affect the digital currency, leading to price volatility in the wake of the event. Suspended trading is also a common occurrence whenever there is a hard fork, and as such, you will find it hard to get good value for your investment. At other times, you might even end up losing your entire investment during such events.
Is it Still a Good Investment or Not?
The market is not stable and if you choose to invest in cryptocurrency, ensure that you only invest a tiny fraction of your portfolio. For someone that wants to invest short-term, the market volatility is the main danger to your investment. However, someone that is investing for the long term will find cryptocurrency to be just what they need.
***Remember to always make your own informed decisions when it comes to your investments, this is not to be used as financial advise!
A Decade of Cryptocurrency
2010 – A single bitcoin was worth $0.30. It was merely regarded as an innovative idea and had not taken hold.
2011 – Altcoins had also been established and where alternative forms of cryptocurrency. They demonstrated the decentralized nature of the currency, with Bitcoin hitting the first bubble of $31 in June of the same year.
2012 – Scammers started to take advantage of the community, and investors were no longer safe.
2013 – Bitcoin broke $1000, and the surge attracted a lot of interest from the general community.
2014 – Unfortunately, an Mt. Gox hack disrupted the industry and brought questions to the nature of cryptocurrency security.
2015 – Smart contracts were introduced, which saw an improvement in how the currency was used.
2016 – Ethereum had a hard fork after an attack.
2017 – The love for cryptocurrency rose steadily, with technology giants starting to take an interest in it.
The growth has been steady the past decade and Bitcoin is becoming steady over time. Some claim it will keep growing in the years to come and you do not want to miss out on the opportunity like most did in 2010 because they were uncertain of the outcome. It is safe to say cryptocurrency is a more stabile investment option now than before. The question you need to ask yourself is if you are ready to invest at the current time and possibly get a large profit in a couple of years!
I hope this article was helpful and that you found it interesting. If you have any questions, we will be more than happy to answer them below.
All the best,
Pete