Cryptocurrencies everywhere, should you invest?
If I had told my friends and family a while back that they should have a portion of their investment portfolio in cryptocurrencies they would have declared me for crazy. Even more so, if they knew that I had invested a substantial part of my portfolio in several of these digital currencies. Well the fact is that a type of virtual currency secured by cryptographic and generated by computers didn’t seem that reliable. However, today nothing is less true and you’re not in the loop if you have never invested or trade a single Bitcoin, Ethereum, Litecoin, Chainlink, Polkadot (or why not? Dogecoin) in your life
Cryptocurrencies are practically everywhere these days and no longer just for day traders and tech enthusiasts. In fact, many traditional companies are integrating cryptocurrency into their platforms in some form, or using it as a means to launch other types of products.
Cryptocurrencies continue to gain traction
Let’s take an example to drive home the point: In October 2020, PayPal launched a new service that made it possible for account holders to buy, sell or hold cryptocurrencies, or use it to buy things from 26 million merchants around the world.According to the payment platform, the popular use of cryptocurrencies has been “largely hampered by their limited usefulness as an exchange instrument due to the volatility, cost and speed of transactions.”
Despite this, they believe their platform could provide a means to make cryptocurrency more useful as a payment method. They are seriously working on it and such an endorsement from the mighty PayPal gives much food for thought.
“The shift to digital currencies of currencies is inevitable, bringing with it clear advantages in terms of financial inclusion and access; efficiency, speed and resilience of the payments system; and the ability for governments to disburse funds to citizens quickly,” said Dan Schulman , president of PayPal in a recent press release.
Even big gurus like Elon Musk are betting big on certain cryptocurrency, like Doge for example. Just take a look at his official twitter account.
Currently, there is a good selection of cryptocurrency savings accounts, while certain credit cards that allow trading with digital currencies are starting to emerge. But what does it all mean? As more and more companies and platforms find ways to use cryptocurrency, or let their customers use it, it will become even more common than it already is. But should you invest in cryptocurrencies?
The answer will depend on who you ask. However my opinion is that in all likelihood we should, provided we have sufficient information.
Why should you seriously consider investing in cryptocurrencies?
According to many experts, Bitcoin has reached record highs and traditional financial institutions are beginning to take the trends of these digital currencies more and more serious. There are more and more movements in the markets based on them and this is a sign that should be taken into account. Bitcoin in the first quarter of 2021 has reached an all-time high of $51K.
In terms of benefits, cryptocurrency gives consumers more choice, independence and opportunity in their finances. The decentralized and open source Blockchain-based nature of cryptocurrencies helps eliminate the weaknesses of the modern banking system by providing access directly to consumers. This makes it easier to buy, sell, store and exchange assets without intermediaries.
Cryptocurrencies are in their infancy and this means that, if you invest now, you could get in on the first floor, even if the prices seem high.
After all, some experts have suggested that Bitcoin could be worth as much as $100,000 a day. A leaked report from Citibank showed that one of its experts believes the digital currency could exceed $300,000 a unit by the end of 2021.
Detractors and anti-cryptocurrency views
But not everyone thinks that investing in cryptocurrencies is a good idea, at least not for the average investor with low purchasing power, looking for long-term value or high volatility for intraday trading.
According to experts the other side of the novelty of cryptocurrency is the incredible volatility we have seen so far. In a nutshell, investing in cryptocurrencies is not for the faint of heart. Look at this example:
Recently the Dogecoin has been a currency of speculation in the markets, with planned movements in the communities to artificially boost its value to 1$. This has made many earn an interesting sum in a few days, but what will happen to those who enter today to speculate with it? They may go bankrupt in a few weeks, who knows? On the other hand, we all know that Bitcoin dropped below $4,000 per coin in January 2019 before reaching an all-time high (so far) at $51,718.17 on March 8, 2021.
Aside from volatility, cryptocurrencies are ideal for fraudsters, as there are no regulations governing the various markets.
Finally, hacking is a big threat if you are a crypto investor. Online exchanges allow you to trade your cryptos on mobile apps and websites, which expose you to hackers who steal your entire investment. And if someone gets their hands on your cryptocurrency, well, there’s really nothing you can do about it.
Cryptocurrency investors must use non-traditional safeguards to acquire and manage their funds. Unfortunately, companies like Coinbase and Gemini lack the track record of security and stability that others like Fidelity, Vanguard and TD Ameritrade have earned.
For these and other reasons Bitcoin and other cryptocurrencies are the perfect environment for speculators to proliferate.
Here in Brickken, we issue security tokens, which are cryptocrrencies backed by a real asset. This allow a more stable investments, which provides more certainty to the investors about what the outcome could be. We are experts in asset tokenization, and if you are interested in more stable investments, but still want to feel what trading in cryptocurrencies is, sign up now!