Experts and banking specialists are still unable to assess the wisdom of investing in cryptocurrency. However, those enthusiasts who believe in the future growth of bitcoin are making a profit right now. The use of the currency is gaining momentum because of the large number of useful ways to implement it. The number of users who have linked their business with bitcoin is growing. This article will allow you to choose the right cryptocurrency and decide if it is worth it.
Peculiarities of investing in cryptocurrencies
The reputation of the digital currency reaches newer heights, the trust of users is also growing. This is facilitated by:
- The expansion of the use of cryptocurrency, including at the state level.
- The investment market is enriched by new players from China and India. Countries and private companies are beginning to look for funds that are not related to the political situation.
- Major online retailers now accept bitcoin, allowing the currency to continue to grow at a rapid pace. The availability of digital currency is increasing, thanks to the installation of street financial vending machines to make payments. The development of cryptocurrency is also associated with the use of new tools for the storage of funds, the development of mining.
As experts predict, the value of cryptocurrencies will grow. However, there may be periods of “stagnation”, when positions will not change, or the time of a non-critical fall. It is also worth considering the fact that long-term investments from a year bring great benefit to the investor and almost never go bust, while short-term investments will be quite unprofitable in the case of a temporary drop in the quotes.
So, in the long term, if you have a fairly large amount of money investing in cryptocurrency is definitely a profitable venture, but even having a very modest amount of free money of 10 – 25 thousand rubles, you can competently invest and earn additional funds. It is important to assess the risks and choose the right cryptocurrency.
Which cryptocurrency to invest in?
Studying the current quotations of cryptocurrencies is the main task of the investor. It is also necessary to take into account the reliability of “digital gold”. At the moment, you can easily get into a difficult situation with fake currencies, which are held by companies and more like a pyramid scheme. Proven cryptocurrencies:
Ethereum has shown steady development since its creation. Of the bonuses for users is the ability to self-generate blockchain applications for financial transactions. The advantage of cryptocurrency is the absence of intermediary companies, it reduces the risk of theft of the invested amount of money. Ethereum users also have the ability to create casinos and betting shops. In the future, experts predict that the cryptocurrency will grow by 10 times.
Bitcoin is one of the most liquid cryptocurrencies. Investors have received more than 120% annual return on investment. This is especially true for long-term investments from 5 years. Of course, having invested in 2012, you can get a fantastic benefit today. It is easy to invest in Bitcoin through a special wallet, which gives access to one of the bitcoin trading platforms.
Monero has a major advantage over other cryptocurrencies, is the anonymity of users and transactions. There are some disadvantages: the currency is very popular on the black market, as funds transfers can not be tracked by law enforcement and others.
Factom is based on blockchain, which ensures data security.
Counterparty is a financial platform that uses blockchain technology and has XCP cryptocurrency. Transactions are carried out on special bitcoin addresses.
Siacoin is a fully anonymous platform with a user-friendly interface.
Lisk is a potential competitor to Ethereum with growth prospects.
Ripple – an ideal cryptocurrency for venture capital transactions, as the commission for payments is reduced.
Steem is a payment system for a service performed.
Zcash is a brand new marketplace with a high level of anonymity and good quotes.
The investment process
Knowing the benefits of investing in cryptocurrencies, and having decided which one to invest your free finances in, you need to think about the process of buying digital money
The traditional way to purchase cryptocurrencies is an electronic wallet, which only the right holder has access to, fraudsters will not be able to hack it, even if the service on which it resides shares data. Transactions with digital currencies can also be carried out on special exchanges, where you get several wallets at once for unhindered operations. Wallets on exchanges are regularly hacked, so keeping large amounts of money is a big risk.
There are exchanges, through which you can re-buy bitcoins for rubles from other users. The services of this type usually have a good rate. The operation is easy to perform, having a card of any other bank. The whole process looks as follows:
- The buyer chooses a seller, in whose account a certain amount of bitcoins is blocked.
- The number of the card to which the transfer is made appears.
- After the payment is made, the seller confirms receiving the money, the bitcoins are transferred to the buyer.
Difficulties for beginner investors
Even a professional cannot predict the rise or fall of new cryptocurrencies, their rate depends more on advertising and all sorts of speculation. With more proven players, such as Ethereum or Bitcoin, the situation is more clear and predictable. But there are a number of other problems related to technical problems. An increase in the number of users will cause transactions to be slower than usual. Payment transactions involving small amounts are unprofitable because of the transfer fee charged. This feature of the new currency may significantly weaken its impact on the economic situation in the world, as well as affect the price and quotes.
Advantages and disadvantages of investing
We would like to start with the advantages of investing in cryptocurrency, because it is really profitable:
- For a long time, Bitcoin has been showing stable growth against other currencies.
- Users have a special trust in bitcoin. Other cryptocurrencies are not in such demand. After any fall, bitcoin is sure to go up. In addition, it has a high capitalization, which further strengthens the position of the currency.
- Bitcoin has already been scaled, and the subsequent branching into a new currency will attract even more users.
- Bitcoin’s liquidity is higher than other cryptocurrencies. The possibilities of using it for buying and selling are also vast.
- Investing in cryptocurrency is a must now, as bitcoin and other digital money are currently exempt from government pressure. There are no additional fees for holding coins, as with deposits or bank accounts. Pros of most cryptocurrencies: anonymity, decentralized.
In addition to the positive factors of investing, it is worth mentioning the disadvantages:
- Significant decrease in the transaction speed for more than a year has been alarming users. According to experts, the situation can only change for the worse, but scaling up the network may solve the problem.
- Some states have prohibitive policies. Excessive control will also lead to the aggravation of the situation, the loss of confidence among users.
- The growth of the rate may be replaced by a sharp “collapse”, which further increases the risks of investing.
Risks of investment
The risks are also conditioned by the fact that even a group of speculators, acting in concert, may affect bitcoin’s status. It is worth remembering the time when the rate fell almost for no reason, in the first days of 2017 it was $1,153, and in five days it had already sharply shifted to $850. Such situations are quite rare, but one should not discount such a possibility. With large investments, it is possible to lose a significant amount.
How to assess the risks?
“Altcoins,” currencies that compete with more proven financial market players, are considered even more profitable in terms of investment. However, their situation may change dramatically in 2-3 years. it is difficult to predict the exact time of stagnation, so the investor should make an independent, weighted decision on the reliable investment of their own funds.
Nuances and possible problems
As predicted by experts, the value of cryptocurrencies will grow. However, there may be periods of “stagnation”, when positions will not change, or a time of non-critical fall. It is also worth considering the fact that long-term investments from a year bring great benefit to the investor and almost never go bust, while short-term investments will be quite unprofitable in case of a temporary drop in quotations.