Cryptocurrency has certainly become a buzzword in recent years – with the rise of Bitcoin, Ethereum, and other coins, cryptocurrency has been a popular investment for many people’s portfolios.
But is it smart to invest in cryptocurrency yourself?
Cryptocurrency: Volatility & Security
Overall, cryptocurrency itself is a safe, legitimate investment you can make with your money. It is backed by blockchain technology, which creates a decentralized ledger that ensures each individual transaction is encrypted. It is important to note, though, that while cryptocurrency itself is safe, the providers you purchase it through may not be.
Cryptocurrency can be compromised should there be a data breach through the stock trader app you use to purchase your crypto. Because cryptocurrency is not treated like regular money, it is not backed by the government and will not be covered should you experience a catastrophic loss.
Beyond the risk of a security breach, there are additional risks you take when investing in cryptocurrency. Like stocks, cryptocurrency is at risk of experiencing sudden drops that can lead to losing thousands of dollars depending on the amount of investments. Just in 2021, Bitcoin experienced a near 7% drop following Elon Musk tweeting a “breakup meme” about the cryptocurrency. Just like with stock trading, you’ll want to invest with caution and ensure your investment portfolio isn’t solely made up of cryptocurrencies.
The Future of Crypto
Though there are certainly risks involved with investing in cryptocurrency, the reward may be worth it.
Even with the drop Bitcoin experienced after Elon Musk’s tweet, its value has still more than doubled as of August 2021. Other cryptocurrencies have experienced significant growth too, ensuring that at least in the short-term there is money to be made. Additionally, more and more companies are adopting cryptocurrencies as legitimate forms of payment, leading to higher investments widely.
Many financial experts have projected some of the more popular cryptocurrencies will be around in the next few years, and are likely to experience growth during this time. It’s long-term growth and sustainability, though, is still up in the air.
Should You Invest?
Overall, investing in cryptocurrency could lead to some significant growth in your overall investment profile. Given the dramatic growth some of the more commonly bought coins have experienced, there is potential for continued growth.
If you are considering investing some money into cryptocurrency, be sure to proceed with caution. Keep your investment portfolio diverse, and don’t solely rely on cryptocurrency as the main piece of your portfolio. And, given the volatility of cryptocurrency’s worth, experts recommend you only invest money you are able to potentially lose.
If you’re considering investing in cryptocurrency, be sure to take advantage of stock trader apps to help you get started. Different apps offer various cryptocurrency investment options along with plenty of other available stocks to help you create a diverse, robust stock portfolio. Before you decide on which cryptocurrencies to invest in, you can look into which ones are performing well, and others that may be up-and-coming for a higher return in the future.