Unless you’ve been living under a rock for the past couple of years, you’ll have no doubt encountered a lot of buzz around the investment potential of cryptocurrencies like Bitcoin and Ethereum.
If you haven’t thrown your hat in the ring with any crypto investing so far, stay with us as we discuss the upsides and downfalls of doing so.
Pro – There’s Potential for Significant Gains
Crypto is celebrated as offering better returns than many other investment options, and if you pick a coin that’s destined for greatness then you could see gains in the tens, hundreds or even thousands of percent.
Con – There’s the Chance of Major Losses
The flipside of the prospect of getting onboard with a currency just before it goes stratospheric is that you could also suffer from succumbing to hype and find that you’ve bought at the top, only to see the value go into freefall.
The volatility of crypto is well documented, so you have to be comfortable with the idea of this being a very risky investment.
Pro – Buying Crypto is Easy
The rise of cryptocurrency exchanges has made it a breeze to browse coins, as well as buying and selling them at will. Whether you choose to make a purchase with a payment card using fiat currency, or swap one token for another, the top exchanges take the hassle out of investing and trading.
Con – Your Credit Card Provider Will Likely Treat Your Crypto Purchase as a Cash Advance
One of the things to know about buying crypto with credit card services is that typical providers will process this in much the same way as if you attempted to take cash out of an ATM via this method. That means you’ll pay steeper fees, worth anywhere up to five percent of the total transaction.
Pro – The Market is Diverse
Bitcoin is very much the flagship cryptocurrency in terms of profile as well as value. But there are a whole host of alternatives out there, including the aforementioned Ethereum as well as tokens that are more about having fun than attempting to shake up finance, like Dogecoin.
Con – Crypto Has a Sustainability Problem
The hardware powering cryptocurrencies sucks up vast amounts of energy worldwide, and this has led to concerns about the eco-friendliness of Bitcoin in particular. Then there’s the fact that once equipment used in crypto mining reaches a certain age, it becomes electronic waste, which has to be dealt with.
Improvements are being made, with a move from proof of work to proof of stake helping Ethereum to go green. But for Bitcoin, power consumption is part of the way value is attained and maintained, so this aspect won’t go anywhere.
Pro – It’s Secure and Anonymous
The blockchain tech on which cryptocurrency is built offers transparency, in that every user can see every transaction across the network. However, anonymity is built into the ethos of crypto, and it’s still achievable if you wish.
Con – It’s Prone to Malicious Exploitation
Part of the reason behind crypto’s bad reputation is that there have been many examples of exchanges getting hacked, wallets getting stolen, transactions being spoofed and many other types of mischief taking place. This further adds to the risk of investing, and might put off anyone who is looking for a stable, reliable place to put their money.
However, you feel about crypto, there’s no denying that it is an impactful new force, one which has the backing of many established investment firms, as well as of everyday people. Dabbling rather than going all-in is advisable if you do decide to see what crypto has to offer.