4 Things to Know Before Investing in Cryptocurrency
When you travel to a different country, the first thing you do is to visit the bank and exchange your money for local currency. Investing in Cryptocurrency is similar to exchanging your money in a new country. Cryptocurrencies are a kind of digital asset, and people use them to invest and make purchases online.
There are some foreign currencies such as Bitcoin, Ethereum, Litecoin and they operate in a very specific context within some online communities. Any type of currency exchange takes place on shared trust. We value normal currencies such as USD, Euro, INR, etc. because we know we can use them to buy goods or services.
Making Investment in cryptocurrency is highly-profitable but risky at the same time. However, there are few things you need to know before investing in cryptocurrency.
4 Things to Know Before Investing in Cryptocurrency
Jacob Eliosoff, a cryptocurrency fund manager emphasized for beginners, “Never invest more in crypto than you can afford to lose, Investing in cryptocurrency is still risky”. His statement is crucial and if an expert, and still making such a statement then we need to think about it. That’s why you should consider the following points before making an investment in Cryptocurrencies.
- Cryptocurrencies are unpredictable
The value of cryptocurrency undergoes extreme fluctuations. Currently, 1BTC is equal to $48,715 but as per reports of 2017, the value of Bitcoin fluctuated between $900 and $20,000. The cryptocurrency’s value goes through extreme ups and downs, and that’s why investing in cryptocurrency is risky. It is not a new fact as all investments bear a degree of risk. But you should always avoid unnecessary risks, especially when your hard-earned money is at risk. Take your time, understand all the risks, talk with experts and only then take a step.
- There are lots of unknowns
This field has a lot that needs to be explored. Even after 10+ years nobody even knows who founded bitcoin! There is a small group who understand the system and know exactly how it operates. So invest in cryptocurrency if you know about it properly, don’t dive in on the advice of your friends, colleagues, or people who claim themselves as experts of Crypto investment. Do proper research, think about how much of your overall portfolio you are going to invest and how much risk you can afford. Don’t invest in cryptocurrency without the proper information.
- Cryptocurrency can be used for fraudulent activity
Those who wish to remain anonymous and avoid the regulation of banks or the government will make shady deals in the black market using cryptocurrencies. Money laundering is also a common problem in the crypto world. We are not saying that every cryptocurrency holder or user is a bad person. But we are saying that if someone wants to commit a crime and avoid being tracked, then the cryptocurrency world is the perfect place for them. Cryptocurrency provides a top-level of anonymity but it also makes everything shady in the crypto world.
- Cryptocurrencies have no fixed rate of return
Trading in cryptocurrency can be considered as gambling, it is similar because it exchanges peer-to-peer and there is no involvement of regulatory standards, there is also no pattern or rate for its value to go up and down. Actually, no one can predict changes and even returns as you can with the stock market and mutual funds. The crypto world doesn’t provide enough data, or enough credibility, to create a long-term investment strategy in the crypto world. You just have to stay updated and learn everything before making an investment in cryptocurrency.
Meanwhile, we strongly recommend you to invest in cryptocurrency in the long-term, in this way you are actually avoiding a lot of risks. However, if you are looking for a crypto-based project to invest in, go with PowerCorp’s PKoin. PKoin is a stable coin that is based on ERC-20 and blockchain technology. It makes investment and borrowing easy. It is a revolutionary project that will upgrade the current financial structure.