Does cryptocurrency a good investment ?

 

Cryptocurrency can be a good investment if you are willing to accept that it is a perilous gamble that can be paid - but also that there is a strong possibility that you will lose all your money. can.

Before investing in bitcoin or other cryptocurrencies, you must open your eyes and go inside.

Is it a good idea to invest in cryptocurrency?

If you invest in cryptocurrency, do it based on facts, not hype - and a lot of hype.

The Bank of England will not agree that this is a good investment. Governor Andrew Bailey warned that those who invest should be prepared to lose all their savings.

What are the risks of investing in cryptocurrency?

In almost every country, governments and financial regulators have warned investors against the dangers of buying corrupt currency.

When investing in headlines, advertising, or celebrity endorsements is a way to become rich, investors invest without thinking about the risks.

1. Volatility

Extreme volatility is a clear element of cryptocurrency. Although you can make more profit, you can lose everything.

2. Scams

In November 2021, its customers were reporting about ً 1 million worth of corrupt currency scams to Santander UK every month. The scale of the fraud is huge.

One of the most common types is when a criminal hacks into your computer and freezes you from your account.

3. False promises of high profits

Cryptocurrency firms are also increasing how much investors can gain by investing in cryptocurrencies while minimizing risks.

4. No compensation scheme.

Bank deposits in the UK are almost always covered by security schemes such as the Financial Services Compensation Scheme, this is not often the case with cryptocurrency investments. If the cryptocurrency exchange breaks down, there is no guarantee that you will get your money back. If you lose your password, again, there is no one to get it back.

Is cryptocurrency a good way to make money?

Early investors in cryptocurrencies such as bitcoins may have made money: If you had invested £ 310 to buy a bitcoin in April 2016, five years later your investment would have cost about £ 35,000. Will be.

The value of the bitcoin rose to 2021, reaching a record low of just under £ 44,000 in November, but fell to £ 27,000 at its lowest point in 2022.

While this is worth over £ 310 for a bitcoin, it shows how volatile even the most popular cryptocurrency is.

The world's largest cryptocurrency exchanges are listed on the mainstream stock exchanges. San Francisco's Coinbase * debuted in the US Nasdaq stock market in April 2021 with a value of over bn 100bn (£ 70bn), doubling its market cap to that of Barclays Bank.

By February 15, 2022, the value had fallen to $ 41.86 billion.

New cryptocurrencies, which use the most blockchain technology, keep popping up all the time. Some are intended to replace traditional currencies such as the pound or the dollar. In contrast, others are used to create new types of financial applications or to exchange value between different digital currencies.

So if you are considering buying digital assets, look closely at individual projects to see how they might work in the future.

Are you buying a completely useless digital coin or something that offers innovative solutions to existing financial problems? If you are new to digital assets, read our article on cryptocurrency trading for beginners here.

What are the average profits for cryptocurrencies?

There is no guarantee that a cryptocurrency will work in the long run.

For example, out of the top 10 cryptocurrencies in terms of market value in 2013, only seven are still in operation today.

The top 10 cryptocurrency coins in 2013 using industry data provider Coinmarketcap.com were:

1. Bitcoin
2. bitcoin
3. peercoin
4. namecoin
5. feathercoin
6. Terracoin
7. devcoin
8. Frequin
9. Novacoin
10. CHNcoin

In 2013, a bitcoin was worth less than 112, and its total market value was over $ 1.2bn. As of February 15, 2022, a bitcoin is valued at approximately $ 44,192 and has a total market value of $ 836.38bn.

Eight years ago, a bitcoin cost 3.38. In April 2021, it was worth about 5 245 per coin. It is now priced at $ 130.70.

Devcoin, Novocain and CHNcoin are no longer listed by Coinmarketcap, while two out of 10, freicoin and terrain, have fallen in value in the medium term. The price of terracotta is half that of 2013.

So buying small coins and keeping them as a long term investment is not necessary for anyone to have any real money.

There is a constant flow of new cryptocurrencies in the market. Dogecoin is just a recent example that has begun.

Is Ethereum a good investment?

If the value of any asset rises rapidly, there is always a chance that it will fall just as fast. We saw it in 2022 with Ethereum.

Correction is usually defined as a reduction of more than 10% in assets. This can be a great shopping opportunity for an investor.

Launched in 2015, Ethereum has been growing rapidly since July 2021, reaching a high of 46 4,617. At the end of January 2022, it had dropped to 11 2411.

However, keep in mind that about two years ago it was about 2 122. It is still one of the most popular cryptocurrencies because it is used more than just a cryptocurrency.

Ethereum is used in smart contracts and payment company Visa has recently stated that it will use it to record cryptocurrency payments.

When you look at the history of bitcoin, it reached the £ 10,000 mark almost four years later, so Ethereum could follow a similar pace given its popularity.

Is cryptocurrency a good long term investment?

Yes, according to sophisticated investors like banks, hedge funds and pension funds.

More and more of these people are investing in cryptocurrency than ever before, and investment banking company JP Morgan Chase suggested in February 2021 that investors invest 1% bitcoin in their investments to diversify their portfolio. I can consider putting.

However - this investment advice is aimed at financial professionals - not your average investor who owns a few thousand pounds in stocks and shares.

Investing in cryptocurrencies that are not particularly well-known or well-collaborated is fraught with serious risks.

Some early investors who have shown resilience have made themselves rich. Who doesn't have Well, it should be clear that their value has fallen to nothing?

Most serious investors in cryptocurrency will not consider investing in projects that are not well known.

Top Tip:

See what sophisticated investors are buying. Pension funds or university endowments, which manage billions of pounds of cash and specialize in long-term investments, will often only invest in bitcoins - if they invest in cryptocurrencies at all.

Bitcoin is the original cryptocurrency and has long-term value because it has never been hacked and has maintained 100% uptime since its launch.

Is Bitcoin a Good Hedge of Inflation?

Investors are talking a lot about digital currency as a way for investors to hedge against inflation.

When inflation rises, as is happening now, the value of cash in the savings account falls over time. As the years go by, we can buy fewer goods and services in our bank accounts.

Investment options are presented as "hedges" - for example, government bonds or gold - either tend to have more value than cash for the long term, or they decline in other parts of the economy. Are not affected by

That's why long-term investment advice focuses on withdrawing cash from our bank accounts and transferring it to assets such as stocks and shares, or cryptocurrency, which can grow over time.

Baked in bitcoin code is the promise that no more than 21 million units of bitcoin will ever be created. So instead of being an inflation currency like sterling or dollar, some experts say bitcoin is the opposite: it is inflationary, its value increases over time.

Of course, the downturn in favour of bitcoin goes down if governments decide to specifically regulate it. India, for example, has proposed a ban on cryptocurrency trading, proposing to impose fines on anyone caught seizing any digital assets.

The regulatory uncertainty surrounding bitcoin and cryptocurrency, in general, is one of the reasons why many investors give it a complete discount.

Is cryptocurrency a good investment? Checklist

• Investors in cryptocurrencies should work as hard as they would with any other investment.
• Think long and hard about which cryptocurrency has the real potential to change the world.
• Try not to be misled by the dishonest money takers with this or that coin under the slogan "going to the moon".
• Remember there is no such thing as losing a month's wages in a day to bring an investor back to earth.