Risk Factors Associated With Investing In Cryptocurrency

Risk Factors Associated With Investing In Cryptocurrency

This decade is all about virtual currency. Gone are the days when people had to keep real money in their possession as a sign of wealth. Now, everything has gone digital. You don’t need to burden yourself with the requirement to carry around huge bucks of money, which you might need to use later on. Even the assets have become intangible, and you can hold a great value of assets in your name without actually being able to see these belongings! Cryptocurrency is surely the most common form of invisible assets today. However, it comes with some risk factors associated with it, along with a plethora of advantages that it offers. If you buy a huge bulk of bitcoin and manage it through the https://bitqs.io/, it would be only you maintaining it, not the central authority.

Cryptocurrency; What’s The Actual Deal?

Cryptocurrency, in simple words, is a form of monetary exchange where you don’t need to keep real money in your possession. Considering its popularity, it’s quite visible that it is the future of exchange in every term and manner. Hence, it comes with the benefit of making international transactions easier. You don’t need to deal with the complications of converting the national currency into the international one. This is because cryptocurrency works uniformly everywhere and has the same value!

Risk Factors with Cryptocurrency investment

Even though cryptocurrency is quite a sought-after option in today’s time, you need to be a little cautious while choosing this route. This is because if you don’t have enough knowledge about how it works, you may end up in a huge loss or a scam. 

Some of the major risk factors associated with cryptocurrency investment are as follows:

Cryptocurrency is an unregulated currency

One major difference between cryptocurrency and regular currency is that a central authority regulates the latter. It does not operate without any authority controlling it. For instance, the fiat currency that you use every day is managed and supervised by the banks. 

On the other hand, cryptocurrency is free-flowing, and no one is maintaining its value or overseeing the actions. 

As the government is not involved, crypto is not a taxable currency. The market and the concept are new, which makes it quite an attractive investment opportunity. However, as the tax is not applicable, there is no benefit associated with cryptocurrency for the government, which is why it doesn’t regulate it. Hence, if you end up being scammed one way or another, you can’t get the governmental support to prove your innocence. 

Limitation in usage

Though cryptocurrency, as a concept, is getting a lot of popularity. However, it is still not as widespread as the idea of using the fiat or regular currency is. Shifting from regular money to bitcoin for daily dealings may take some time.

In terms of monetary exchange, a cryptocurrency needs some time to become convenient and normal. However, there are a few online stores that have made bitcoin a possible manner of exchange, including Newedd and Overstock. Nonetheless, the idea is yet to gain reliance amongst business owners to be a legitimate transaction method.

The volatility of the market

This is probably the biggest risk associated with the concept of cryptocurrency, making you hesitant to put your hard-earned money into it. The crypto market is highly volatile. You can’t predict how it will fare in the coming days. It may give you a huge profit one day, leading to a massive loss in the coming week.

This volatility is owing to the working methodology of this currency. There is no regulatory authority for it; rather, the market works on speculations. Speculations and trends constantly change the currency’s value and drastically affect the changing patterns. These sudden profit and loss ripples make it a highly risky investment.

Final Thoughts

Though crypto is indeed a novel concept and many risk factors are associated with it, it surely is gaining a lot of momentum amongst people. If you want to try out this new form of investment, just do it in a way that you would be least affected by these risks. Just make sure to be well-informed regarding every aspect of your investment and you would be able to averse all the risks!

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