Cryptocurrencies are known to have the potential to deliver huge returns on your investment. But they also come loaded with huge volatility and risk factors. In spite of the risk factors and some challenges, cryptocurrencies are likely to grow and become a potential investment for many. You should keep yourself updated with the latest cryptocurrency news to become successful investor. It is already experiencing huge growth as more and more people are investing in them.
Considering several aspects related to this new form of investment, we are going to explain here some of the most important pros and cons of investing in cryptocurrencies.
Pro 1: Tremendous potential for returns
Just a few statistics are enough for one to consider investing in cryptocurrencies. Just think of a simple fact. Anyone having invested just $1,000 in Bitcoin in the year 2013 would have a worth of $400,000 today for the said Bitcoins. Several cryptocurrencies experienced hundreds to few thousand times of growth in a short Sona if time.
Pro 2: Shorter investment cycle
Just because they depend heavily on networking and latest technology, cryptocurrencies can be tracked quickly, and the investors can book their profits relatively quickly than any other wealth.
Pro 3: Enhanced liquidity
Cryptocurrencies are almost immediately redeemable as Cash for the investors, and that makes it an ideal tool for investment. You cannot encash any other wealth as quickly as cryptocurrencies. The faster liquidity made it one great choice as an investment.
Pro 4: Bitcoin is less likely to bust
You can think of Bitcoin as a bubble having exposure to a lot of risk factors. But, they proved to be reliable as of now for many investors. With the proliferation of Blockchain, digital currency industry is likely to prosper and grow at rapid speed. Naturally, it is less likely to face bust as other wealth niches. Unlike other wealth like the equity of web companies during the dotcom boom, cryptocurrencies represent actual transaction value, and hence the value cannot be overhyped.
Pro 5: You have a proper and trusted investment path
When you invest in a particular type of wealth like the equities you do not have the detailed knowledge of the company and the growth potential. In complete contrast, cryptocurrencies are transparent and show you the entire picture starting from the investment, achieved growth and challenges. You have more clarity and scopes of evaluation before investing in cryptocurrencies.
Pro 6: Relieved of transaction hassles
The entire hassle of banking with traditional assets is a big demotivating factor for many to choose cryptocurrencies as a simple solution. For the vast majority of banking transactions, there are too many hassles and a high cost for this. Bitcoin account until now has been offered by most of the banks as the free of cost.
Con 1: Tremendous volatility
The value of Cryptocurrencies is highly volatile. There are many people who treat cryptocurrencies as their new buddy to make money, while there are too many others who fear cryptocurrencies for their volatility and risk factors. While Bitcoin becomes almost mainstream, other cryptocurrencies are still lagging behind.
Con 2: Network failure
The unperturbed network is one of the key requirements for cryptocurrencies. It must make use of a network that is already popular among its users. In case such networks just fail to make steady acquisition of users, the cryptocurrencies can experience de-growth of value.
Con 3: Shortage of resources
Just like the startups that becoming out of resources becomes stalled from running their operations, a particular cryptocurrency ICO without being able to raise immense money from the market can actually stop growing. This shortage of resources is particularly common initially and can make cryptocurrencies suffer in terms of maintaining value.
Con 4: The threat of mismanagement
In the last analysis, each cryptocurrency should be regarded just as a startup run by few founders. From the initial launch to the coming on the mass market, cryptocurrencies continuously require the push from credible management. In this respect, many new cryptocurrencies just suffer from poor management.
When it comes to maintaining profits with transactions the management needs to consider several aspects. In case commissions are higher they just can be unprofitable for small ventures and enterprises. That is why sticking to a balanced rate matters. Another problem that the management should be able to deal with is the too many state-level regulations for investing in cryptocurrencies.
Con 5: Sharp rise in the exchange rate
The unprecedented increase in bitcoin exchange rate which is almost compared with a meteoric rise makes another challenging proposition for cryptocurrencies. Just in recent years, we have seen a hefty hike in the exchange rate for Bitcoin that ranges from $1000 to $1300 within January-April 2017 and a hike from $1300 to $1700 very recently. While Bitcoin having already garnered phenomenal growth can withstand such hike of exchange rate other new cryptocurrencies just cannot.
As the new investment possibilities are pushing the boundaries of technology, we need to remain open to new possibilities and evolving opportunities for making gains from our investment. Bitcoin and cryptocurrencies obviously pose a lucrative growth prone investment for many of us in the recent years.
Lastly, cryptocurrency ICOs seems to be better than even the so-called venture capital investment. Let us conclude the post with a small piece of advice. Always compare the cryptocurrencies as your investment options before just taking a call. Remember, investment is not a subject of whims and wishful thinking.