The worldwide rise in the popularity of various cryptocurrencies has resonated with the Indians as well. Between 2022 and 2023, the number of cryptocurrency investors rose remarkably by 1,100 %. This is an amazing industry development, which indicates that the Indian people are more interested in the sector than ever before, however, it poses an important dilemma – should people, who have not participated in the explosion of the cryptocurrency market recently, think about investing in cryptocurrencies? Is it safe to invest in cryptocurrency?
Investing in cryptocurrencies: There are still many elements preventing potential investors from jumping and investing in arrogance. In several cases, certain ones of these assets attract investors depending on the statement of the purpose of the developers, while other kinds of investors like to speculate about the price movement and volatility of assets that they consider as their own. It is common to say that the technology of investing in coins and currencies is rather complicated but all of them are extremely different from one another. The attitude of beginners should always be such that they have to.
There are many aspects of cryptocurrencies and these aspects come with advantages and disadvantages. It is important to learn more about the factors involved before you up to whether you are happy with the risks. Below are a few points to help you before you jump in.
Risks of Cryptocurrency
The following are some of the risks of the crypto:
1. Volatility
The price of cryptocurrencies has been candidly volatile, that is the prices tend to rise and fall quickly and often with big highs and big lows. Even if they do reverse, several elements cause the price to swing.
2. Regulatory uncertainties
The rules of governments with regards to crypto keep reforming sometimes even in areas where one is cushioned from poverty. Expect some level of regulations affecting whether, when, and how you will be able to use your crypto, which can complicate and introduce some uncertainties. However, seeing that this crypto is still a young invention to many, most of the regulators have yet to come up with appropriate policies.
3. Securities and scams
Different cryptocurrencies or trading platforms, however, are of different types and qualities. More established ones may be less vulnerable to scam risks than newer coins, while some exchanges are more trustworthy than others. Furthermore, there are no guarantees or insurances against the loss or theft of cryptocurrencies so ensure proper due diligence is conducted before proceeding.
4. Technical
There are two main ways to store your crypto: privately in a non-custodial wallet on a personal device, such as an app on the phone or laptop, in a cold storage wallet, or by using third-party services.
While storing it privately, you are entirely liable for the security of your cryptocurrency. You can marginalize or entirely lose your money in circumstances where you misplace your private key, your hard disk fails or malware attacks your wallet.
Benefits of Cryptocurrency
The given below are the benefits associated with the cryptocurrency:
1. Independence
Cryptocurrency was established to facilitate transacting without the influence of any government or central bank. A coin holder may access his / her coins unreservedly, but she may take it himself to take responsibility for making sure that it is secure.
2. Accessibility
It is possible and easy for people to use crypto all twenty-four hours a day without the need for conventional banking services. All a person needs is internet connectivity and a crypto wallet.
3. Lower fees and faster time
It is observed that some traditional or even crypto transaction processes can be very costly and even take a shorter period as compared to banks. For instance, with crypto, the potential high costs incurred when making global wires can be eliminated as the money will be ready within minutes, which is a huge contrast to a standard wire transfer that takes about 24 to 48 hours. Nevertheless, everyday transactions in the bank such as letting off checks or cashing them are efficient and free of charge.
4. Transparency
Cryptocurrency is based on a blockchain technology that is open, and once created will not be changed or edited likewise every activity within that blockchain can be viewed or monitored at any time.
5. Mainstream support
In a situation where cryptocurrencies are attracting the majority of users, the adoption curve of the traditional banking system has been encouraged by offering/accepting cryptocurrencies as payment. On the more, unlike traditional finance which was established over three hundred years ago, digital currencies are still in their early stages and the outlook remains foggy.
6. High return potential
Even though the nature of crypto is slightly volatile, it hasn’t stopped crypto from producing high returns lately relying on the time it is purchased. It is also a crucial point to keep in mind that even after performing well in the past, it will never guarantee future outcomes.
Crucial factors to consider before crypto investment
There are some factors to keep in mind and should consider before investing your money in crypto. Before purchasing VDAs, it is very crucial to understand their risk appetite, investment objectives, terms of investment, and experience in that particular field.
Also regard other factors particularly public sentiment before engagement in such investment as cryptocurrencies, which are relatively new, are unique in their own benefits and risks. This implies that the country’s cryptocurrency industry has been surging in the recent past.
Conclusion
In conclusion, it depends on you whether you should invest in crypto or not. Cryptocurrency has both benefits and risks, so one cannot say that it is unsafe. Whichever path you choose to take in this case nonetheless, it is important to make an effort, to research, and understand each specific coin and its investment thesis, and even consult a financial expert. One should note that not all coins or such platforms are the same.
Crypto is relatively new and highly speculative, investors must be sure of their aversion to risk before embarking upon any transactions. Make sure you are well informed before making any decisions and only invest what you can afford to lose without jeopardizing your financial health.