Should you invest in cryptocurrency?

Written by Evgenia Sidorova
Written by
Investing reporter
ECOS brand manager....
4   min.
Alternative investments 

You have probably read stories about people who got rich by successfully investing in cryptocurrency. But you surely know other stories too: about people who were less lucky, tried to invest and lost their money. And now you are in doubt – should you invest in cryptocurrency or not? Investing in cryptocurrency seems to be risky as tempting as it may be, especially if you try to venture into the crypto market without prior knowledge. In this article you will find important information about cryptocurrencies, that will help you to answer several key questions: 

  1. Should you invest in cryptocurrency? 
  2. What risks are associated with this investment? 
  3. Is it safe to invest in cryptocurrency?
  4. What are the benefits of crypto in comparison with other investments?
  5. What are the most widespread cryptocurrencies? 

Is cryptocurrency safe? 

Like any other investment methods, cryptocurrency has its pros and cons. Let’s look at them to understand how to use it safely. You should note that some risks aren’t related to cryptocurrency itself: they appear, because this field is new and hyped, and thus attracts many people with no prior knowledge and experience. Educate yourself, use trusted sources, learn how to invest safely in cryptocurrency, and you will lower your risks significantly.  

There are many characteristics that differ cryptocurrencies from the customary currencies that we use every day. They specify the difference in their usage and are the reason why the cryptocurrency market is much more volatile. Here are the key points: 

  1. Cryptocurrency is not tied to any particular government or country. With fiat currencies, there is a central regulation instance for each currency, for example, a National Bank. It controls the amount of money coined and generally influences the state of the market. With cryptocurrencies, there isn’t any controlling institution, which makes the market much more unpredictable. 
  2. The crypto market is very volatile. Most cryptocurrencies aren’t tied to any natural resources, the wealth of a certain country, or to something else in a material world. This means that their value can be influenced by really anything – world news and events, hype, and even famous people’s tweets. Thus, investors should always stay on track and be ready to react when the market changes. 

Anyone who wants to understand if it is worth investing in cryptocurrency, should consider these risks. A general piece of advice that can be given here is, that you should not put all your investment money in cryptocurrencies. Estimate your risks, set your financial goals, and act accordingly. 

Benefits of cryptocurrency investment

But if there are such risks, why are many people still interested in investing in cryptocurrency? Naturally, because the benefits are also very clear: 

  1. Cryptocurrencies can provide high profit rates. Someone, who bought Bitcoin several years ago, now has their capital multiplied. Who knows, what of the multitudes of lesser-known cryptocurrencies will rise next? 
  2. While crypto markets are volatile, they are still independent of traditional markets, banks, and governments. Your money truly belongs to you, and you won’t risk losing it in case the bank goes bankrupt, or a financial crisis happens. 
  3. Once you learn the basics, handling cryptocurrencies is easier than investing in a traditional market. You just need to learn how to establish a wallet in the desired cryptocurrency and how to transfer money. No time-consuming hassle of documents and contracts. 

Cryptocurrency as a long-term investment

If you are a beginner investor and plan to start with a relatively small amount of money, your best bet is to consider cryptocurrency as a long-term investment. Look at the story of Bitcoin: there are periods of market decline on a smaller scale, but if you are able to wait and hold your money, you will get tremendous profit in the end. 

Although there are many cryptocurrencies on the market, it is better to start with major ones. The profit of investing in lesser-known cryptocurrencies is much more difficult to predict, and for an inexperienced user, it can be also difficult to discern fraudulent crypto projects from safe ones. If you are still doubting whether cryptocurrency is safe to invest in or not, your best option is to choose one of the two major cryptocurrencies that now take a significant part of the market – Bitcoin or Ethereum

The benefits of Bitcoin as the long-term investment

  1. It is the first cryptocurrency that got recognition, and now it is widely used all over the world – for many people and organizations, including global companies. Therefore, Bitcoin can be considered safer than any other cryptocurrency: with that many big market players and stakeholders investing in it, the probability of significant market decline is minuscule. 
  2. The popularity of Bitcoin also means that there are many cryptocurrency exchanges working with it, and you won’t have any difficulties with buying or selling Bitcoin. Guides, information, and advice are also easy to find. 
  3. The value of Bitcoin is steadily rising. By design, the mining of every next Bitcoin gets slightly more time- and energy-consuming, and the total amount of Bitcoin in the world will never exceed the fixed cap. That was planned initially to prevent inflation, so, unlike traditional currencies, Bitcoin won’t lose its value because of it.

The benefits of Ethereum as a long-term investment

Many of Ethereum’s benefits are similar to the ones that were described for Bitcoin. It is a well-established currency with a good reputation and stable future, and it is widely accepted by many exchange platforms. So, if you want a stable long-term cryptocurrency investment, you can consider this option too. Moreover, Ethereum has its own benefits as well: 

  1. Bitcoin was the first cryptocurrency, and since the time of its creation, the technology has been significantly improved. This means that Ethereum owners get more options regarding what they can do with their money. They also will get faster transactions, and the growing Ethereum network promises remain sustainable even with the increasing number of users. 
  2. Some world-level companies already accept Ethereum as purchases, including several major banks. 
  3. Ethereum is not only a cryptocurrency but also a technology of smart contracts having the potential to revolutionize the way how financial markets work. Therefore, one can expect the increasing value of Ethereum, especially in long-term periods. 

Another big difference to Bitcoin is that Ethereum doesn’t have a supply ceiling. It’s difficult to predict now how it will affect the market from a long-term perspective. 

So, should you invest in cryptocurrency?

As you can see, cryptocurrency has a high potential for profitability but also brings some risks. We wouldn’t advise putting all your investment money into cryptocurrency, but adding Bitcoin or Ethereum to your portfolio is always a good idea, especially for reaching long-term investment goals. You can use cryptocurrency investment to keep some amount of money independent from a traditional market and invest in actively developing and growing technology that will provide you a stable source of income in the future. 

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