Investing in cryptocurrency can produce unbelievable returns but the risks are of insurmountable nature and could wipe all your investment and leave you penniless. One can get rich to utopian levels by investing in cryptocurrency but you could lose all your money.
Let’s dissect the pros and cons of investing in cryptocurrency.
Is Cryptocurrency Safe?
Cryptocurrency is here to stay and it is not entirely safe. Since Blockchain technology is the future therefore we will have to live with risks of cryptocurrency and we cannot just wish it away.
Cryptocurrency are traded on Crypto Exchange and unlike the stock exchange are more prone to cyber attacks and hacking by criminals. There have been instances when investors have suffered hefty losses because their digital currencies were stolen. This has forced many exchanges and third-party insurers to begin offering protection against hacks
Securely storing cryptocurrency is more difficult than safely storing stocks and bonds. One can store their cryptoassets with exchanges like Coinbase where cryptocurrency like Bitcoin (BTC) and Ethereum can be both stored and traded. However, investors do not want to keep their digital assets on exchanges and do not want third parties to control access to their assets. Keeping your cryptocurrency with an exchange means the investor will not have full access or control over their assets. It is possible that the government could ask the exchange to freeze the investors account or the exchange becomes bankrupt and cannot pay back your money.
There are other options like the offline “Cold Storage” option which includes hardware wallets. However cold storage comes with its own set of problems. The biggest risk is the investor losing his key and it is impossible to access the deposited crypto asset.
The cryptocurrency an investor invests will face fierce competition since there are thousands of Blockchain projects. Many projects are genuine but there is no dearth of scams and fraudsters. In this multitude of ordinary block chain projects a precious few will succeed to make their mark and if you are lucky to identify such projects and invest in them you will strike gold.
There is always a threat of a crackdown by Governments against crypto-assets. Cryptocurrency goes against the present financial regimen and every effort will be made to make the switchover difficult.