Merits And Demerits Of Investing In Cryptocurrency

 

The digital or virtual currencies that use cryptography for securing and verifying transactions and for controlling the creation of new units are called cryptocurrencies. These currencies are decentralized, which means that they are not controlled by any central authority or government. They can be stored in digital wallets that are protected through private keys and can also be bought or sold on online exchanges.  Bitcoin, Litecoin, and Ethereum are some popular cryptocurrencies, but many other cryptocurrencies also exist. 

In this article, we will understand the merits and the demerits of investing in cryptocurrency. You can share your knowledge or opinions about cryptocurrency with us by writing a guest blog on cryptocurrency write for us. 

Merits of investing in cryptocurrency: 

Below are some of the advantages of investing in cryptocurrency. 

• Cryptocurrencies are decentralized and hence they are less susceptible to government interference and manipulation. They are not controlled by any central authority or government. 
• They are easily accessible to anyone who has an internet connection. They can be bought and sold easily through online exchanges. 
• Cryptocurrencies offer diversification from traditional assets such as stocks and bonds. These are a useful addition to the investment portfolio. 
• They have the potential for high returns on investment as the cryptocurrency market is highly volatile. 
• The transactions made on a blockchain cannot be altered once recorded which means that they are transparent and immutable. It is beneficial for investors and businesses as they provide a high level of transparency and accountability. 

Demerits of investing in cryptocurrency:

Below are some of the demerits of investing in cryptocurrency. 

• There is a lack of regulation. Investors are not protected by the same laws and regulations as they are in traditional investments, this is because Cryptocurrencies are largely unregulated.
• The value of cryptocurrencies fluctuates regularly which means that they are highly volatile and can even lead to significant losses for the investors. 
• They contain security risks as they are vulnerable to hacking and theft because they are stored in digital wallets. The entire investment of the investor can be lost if their wallet is compromised. 
• The usefulness of cryptocurrency is limited as a currency because these are not widely accepted as a mode of payment. 
• Most of the people are unaware of how the cryptocurrency works, and this often leads to uninformed decisions and losses. 

Overall, cryptocurrencies can be used as a mode of payment for some merchants who accepts cryptocurrencies as a form of payment for goods and services. People usually invest in it with the hope that their value will increase over time.