Cryptocurrency has been a popular side hustle and, for some, a career. Cryptocurrencies have been transforming the financial world as we know it and aren’t slowing down. Since the launch of bitcoin in 2009, more than 21,000 different cryptocurrencies have been created, according to Bankrate.
It’s easier for people to say they want to get into investing in crypto after hearing only success stories, but it’s essential for you to understand the pros and cons before embarking on your investing journey.
What is cryptocurrency?
Cryptocurrency is a type of virtual or digital currency and is primarily used to make safe online transactions using encryption algorithms without any mediators.
Cryptocurrencies act as a medium for value storage or exchange, depending on a public ledger technology called blockchain. A blockchain is a virtual chain of blocks, each of which contains a set of transactions and other information. Once information has been added to the blackboard, it cannot be removed or replaced.
Pros of investing in cryptocurrency
Here are a number of benefits to investing in cryptocurrency:
The decentralised nature of cryptocurrencies means they are not controlled by a central authority such as a government or bank. Which can appeal to those who value financial sovereignty.
- Lower transaction fees
The fees are nominal and can sometimes be zero. Third parties are not essential, as you do not have to pay for there services.
- Potentially High Returns
While all kinds of investments come with risks, if you spend the time researching and trust your intuition, you have the potential to make a big return on your investments. Not only that, the cryptocurrency market will reach just under $5 billion in 2022 and is forecast to have an annual growth rate of 12.5% between 2023 and 2030.
Cons of Investing in cryptocurrency
While it might look like a profitable hustle, it does come with risks, and before you begin to invest, its important that you fully understand what you’re getting yourself into.
- Crypto Scams
When starting out, it’s not uncommon to fall victim to cryptocurrency scams. Some tips would be to avoid passing on any sensitive passwords or details, to not take “guaranteed payouts” seriously, and to ensure you do your own research.
Cryptocurrency prices can fluctuate a lot, which is part of trading. While this is beneficial for those who want to make money quickly, it carries a lot of risk of losing money, especially when the price drops significantly.
This can cause panic and drive people to sell; however, its important to understand that once down, it can only go up.
- Time and Effort
Entering as a newbie can take a fair bit of time and effort. If this is a new interest and you’re somewhat new to the concept of cryptocurrency, then it may take a lot more time before you even begin to invest because research is critical to minimising as much risk as possible.
Although there are plenty of online resources to guide you through your investment journey, a lot of time must be spent before any earnings can be made.