Investing in cryptocurrencies is definitely a gamble. We have just listed some cryptocurrency pros and cons.
Just like other kinds of investments, they can give you huge returns. But they also come with great volatility and risk. Nonetheless, it is an investment you wouldn’t want to ignore.
In other words, if you plan to invest on cryptocurrencies, you should be armed. You should know the basics, and you should know the pros and cons of your investment.
In this article, we have listed some of the pros and cons of diving into cryptocurrencies. Read on!
Let’s start with the Pros of CryptocurrencIES.
Number 1: Huge Potential for Returns
According to data, the $1000 invested in Bitcoin in 2013 would be worth over $400,000 today. Sounds good enough?
That figure has convinced many investors consider investing in cryptocurrency. Should you be one of them?
In a short span of time, ICOs have given large returns. Stratis was able to raise $600,000 in their June 2016 ICO. The price has risen 63,000 percent.
Spectrecoin raised $15,000 last January. They have witnessed a whopping 13,000 percent rise.
Number 2: Increased Liquidity
If you purchase equity in a startup, you need someone to buy it from you. Or you can wait for an acquisition or an IPO (initial public offering). That is, if you want to realize your profit.
In simple words, if an ICO (initial coin offering) can build a solid network, you as an investor have much more liquidity. Plus, you can sell the cryptocurrency for dollars almost right away.
Number 3: Clear Direction
Comparing startups with cryptocurrency ICOs, we find out that startups need overcome initial headwinds. As a result, they usually have to pivot many times.
You also expect that the startup will be vastly different from when it was founded.
With cryptocurrency ICO, upon investing, you know exactly what they do. You also know what they will do. And because of this, you can accurately and efficiently evaluate the product.
In the end, you can use that insight in determining your investment.
Now, let’s proceed to Cryptocurrency Cons.
Number 1: It is much more volatile
This is a big downside. Compared to the stock market or real estate, cryptocurrencies are much, much more volatile.
There have been different issues surrounding it. There were hacking incidents, and these caused investors to lose ALL their investments in a snap.
Moreover, even if these incidents are quite rare, they’re not actually unheard of. None a few have heard of massive drops in ICO values.
Number 2: Network Stall
The key to a successful cryptocurrency lies in its ability to offer a useful product. The product should attract a substantial number of users.
The danger, then, arises when it fails to attract users. Worse, users may never use the platform. Unsurprisingly, these things will inevitably result to a drop in price.
Due to lack of network engagement, many recent ICOs failed to perform after launching.
Number 3: Possible Mismanagement
If you come to think of it, a cryptocurrency is basically a startup. It is a business, and it has founders running it.
Cryptocurrency needs a solid founding team if it aims to move out of ICO phase. It needs efficient management if it aims to reach mass-market levels.
This should tell you to be careful. Look into the team’s background, and check everything. Evaluate their skill sets, and consider carefully. Check whether they actually and effectively execute the project.
Now that you know the Pros and Cons:
You must be up to date with the options you have. Technology changes and it is never static. Cryptocurrency is technology. Therefore, you need to follow it closely.
With tons of possibilities piling up daily, you must keep up more vigorously.
Additionally, you must remember that though portfolios should be balanced, you also need riskier assets. That’s what makes an ideal portfolio. In this time and age, ICOs sport numerous benefits that venture capital lacks.
Start thinking about ICOs. Start thinking about investing in them. Check what ICOs are currently available, and know how you can use them to generate tremendous returns for you.
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