The topic of cryptocurrencies has gained popularity around the world. In fact, daily social networks bombard their users with information
Benefits and risks of investing in cryptocurrencies
The topic of cryptocurrencies has gained popularity around the world. In fact, daily social networks bombard their users with information regarding the different scenarios to invest in.
You can buy a small fraction of Bitcoin and little by little you will see your investment grow. In addition, with cryptocurrencies, it is possible to purchase products in stores that accept this payment method. The same happens with some services.
Unlike traditional currency (cash, bank deposit, transfer, credit or debit card), with digital currencies, you will get more benefits. Of course, not everything is perfect, so there are some risks.
Below, we explain the main benefits of investing in cryptocurrencies and the possible risks that, if you are careful, you can avoid.
Benefits
Nowadays, investing in digital currencies has become quite a tempting option. Let's see why:
Account opening: To be part of the cryptocurrency market it is necessary to select a platform and a wallet. Afterwards, you will have to register in both.
It is a simple process, for which you must follow a series of simple steps. This is a quick opening, compared to the bureaucratic procedures required by any bank.
Fast and immediate transactions: The management of the cryptocurrency does not involve intermediaries (banking or government entities), so the transactions are executed immediately. Also, as it is not a currency that operates centrally, you will be able to buy and sell throughout the day. Hours or holidays will not matter.
Security and transparency: When you carry out transactions with cryptocurrencies, you do not run the risk of having your information falsified. This type of currency incorporates a cryptographic algorithm, which has special encryption assigned to the user. Thus, only the holder will be able to have the respective keys to avoid any fraud.
With regard to the transparency of movements, you will have Blockchain technology. In this system, all the information on the user's transactions is stored in a block and transmitted to the members of the chain.
There is no specific server. The nodes are synchronized with each other to share the information of each block. Basically, it is impossible to alter the transaction data and cancel a purchase or sale transaction.
Liquidity: The cryptocurrency offers its users a high level of liquidity on the exchange platform. You will be able to buy or sell assets quickly and thus transform them with a low margin of loss. This is convenient in a market as changing as that of cryptocurrencies.
Monetary internationality: Because cryptocurrencies do not experience any banking or government regulation, you can use them anywhere in the world. In addition, part of its internationality is attributed to the fact that it uses the Internet for its operation.
risks
Every investment carries a series of risks and cryptocurrencies could not be the exception. Know more details:
Mistrust on the part of users: Cryptocurrency is an exchange system that has quickly taken over the market. To understand how this virtual currency works, it is necessary to know certain terms: fluctuations, liquidity, blockchain, nodes, and volatility, among others.
These concepts are often confusing for those who are entering the subject. Therefore, if the person has doubts about the investment, he will feel distrust when executing the transaction.
On the other hand, there is a constant change in the price for the purchase - the sale of the currency, which is a double-edged sword. Remember that this variation can make you increase your Bitcoins or lose them.
Irremediable losses of money: This method of payment (cryptocurrency), is characterized by not being refundable. In other words, if you make a wrong payment or the purchased product does not satisfy you, you will not be able to recover the money.
Also, you can lose all the money stored in the virtual wallet if you lose the access key to it.
Volatility: Assets such as Bitcoin or any other virtual currency, are usually susceptible to abrupt rises and falls in their price. This is because there is no regulatory body. Therefore, the management of buying and selling can be risky if you do not carefully study the market when making the transaction.
Conclusion
Cryptocurrencies are accepted by some and rejected by others. Its autonomous operation in the virtual currency market provides a series of benefits for the achievement of a successful investment. Low transaction costs, security, and transparency are some of them.
Similarly, Bitcoin and other digital currencies have marked risks after the execution of each transaction. Always remember that it is a currency without bank support and high volatility. In addition, it is not yet accepted by all companies or people. In its defence, its level of profitability is much higher than various traditional investment mechanisms.
