Essential Checklist before making the decision of Investment in Cryptocurrencies
Many articles and blogs are claiming that you should invest in cryptocurrency right now. The cons of cryptocurrency are merely brushed over at the bottom of those articles. But, the negatives are equally important for the people to choose what they want to invest in.
1) Extreme Volatility –
Cryptocurrencies are highly volatile. The most popular cryptocurrency, Bitcoin, has a huge difference between its highest value and its lowest value for the year 2021. Wide swings are common in the crypto space.
2) Environmental issues –
A lot of people have now started mining cryptocurrencies. Now mining Bitcoin is not exactly an eco-friendly venture. It uses a large amount of electricity. A fun fact – Mining bitcoins uses more electricity than the entire country of Argentina.
3) Overcrowded Cryptocurrency market –
As of 2021, there are more than 7000 cryptocurrencies in the market. Apart from a few currencies like Bitcoin, Ethereum, Cardano which are well known, there are also so many others that are there in the markets.
4) Valuations –
Now how does one value a Cryptocurrency? If it was land or metal like gold. These are tangible so we can predict their value. This is not the case with cryptocurrencies. Dogecoin which was just a meme coin now has a market cap worth billions of dollars.
5) Acceptance issue –
The majority of countries do not accept cryptocurrency as a legal tender.
6) Individuals influence –
There have been instances when something said by an influential personality has led to a rise and fall in a few cryptocurrencies.
For instance, when Elon Musk said that Tesla will accept Bitcoins, we saw a big jump in the Bitcoin prices and there was a sharp fall when Elon Musk reversed the decision. Similarly, when Elon Musk had tweeted about Doge coins – it saw a big rally, and then there was a fall in the prices. So if the pricing of the crypto is influenced by individuals – one should be very wary about it.
Therefore, if you still wish to invest in bitcoin or other cryptocurrencies. Bitcoin hosting agencies will help you manage your bitcoin. They can provide some form of security to you.