Is it worth investing in cryptocurrency? | head

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If your interest in investing in Bitcoin or other cryptocurrencies has been tarnished by the fear of losing, wait a bit and do some research.

In his report published by the American site “Kiplinger”, Timothy Barratt – a consultant and vice president of the Argent Trust Company – said that there are categories that add – when it comes to investing in cryptocurrencies – some cryptocurrencies. “safe” for their investment. portfolios, and for this category the choice to buy and hold cryptocurrency depends on the principle of fear of loss, or the principle of prudence, in which case the possibility of risk or gain can be compared to a game lottery.

As for other categories of investors, they conduct extensive research sometimes and conclude that cryptocurrencies can be either a “Ponzi” scheme that relies on the continuous flow of a greater number of risks, or a guaranteed way to ‘get rich if you stand for it, or it could be the future of financial exchanges When crypto eventually replaces fiat currencies like the US dollar backed by a centralized federal banking system. They believe cryptocurrencies will provide decentralized financial transactions that free investors from currency manipulation and revolutionize privacy and security in many uses.

Here’s a simplified explanation of the most common cryptocurrency issues, so you can determine the answer to the most important question: Is investing in cryptocurrency worth your time and money?

Understand the basics

There are 3 ways to get cryptocurrency:

1- After opening an online account, you can choose from a huge number of cryptocurrencies and buy them through a dedicated exchange.

In fact, it will look very similar to any other securities, the difference is that the market for these currencies never closes, and prices are very volatile and not at all reliable.

2. You can create a “portfolio” of cryptocurrencies that you buy from someone else using one of the many P2P access points, but this type of ownership carries greater risks such as price increases, fraud, and a complete lack of privacy. it provides the free capitalist environment promised by unregulated and decentralized exchange.

3- You can own your own currencies through what is known as the “cryptocurrency mine”.

Encryption limits

Despite the rumors circulating about some countries and retailers dealing with cryptocurrencies, cryptocurrencies can now only be exchanged for physical fiat currency or other digital assets in the form of immutable tokens (NFT).

The problem is that we are far from building market confidence in the value and stability of the cryptocurrency needed to use it to buy goods and services as an alternative to fiat money.

In other words, there is no reason to believe that cryptocurrencies – although widely circulated – will achieve the price stability needed for their acceptance by sellers, because there is still no market for direct exchange of cryptocurrencies, but purchases depend on first by cryptocurrency conversion. in fiat coins.

As for the prices of cryptocurrencies, they are volatile, but this volatility is not related to any expectations for its use as a currency, but is the result of speculation and expectations of the owners of these currencies, which strengthens the belief among some that cryptocurrency is a “Ponzi scheme” driven by volatile vendor stories Massive prices occur when investors and celebrity billionaires get involved in promotions or whenever a new record is set for buying cryptocurrency. The only way to make money from cryptocurrencies is to sell when the buying interest is high.

Increase in non-interchangeable signals (NFT)

Blockchain is used to create immutable token. These tokens can be a JPEG image, a video file, a text file (such as a contract or title deed), or any number of other digital files that are assumed to be immutable and permanently linked to their place in the chain. of the block. .

But a non-exchangeable token has an exchange value, either against another token or cryptocurrency. For example, if you buy a non-exchangeable token for 1 bitcoin today, the trader can immediately sell that currency for dollars or hold it in the hope that its price will rise later.

wild West

This does not mean that cryptocurrencies as an investment or as a method of exchange will be distributed. Blockchain technology is an amazing breakthrough in the security and usefulness of information sharing, and investing in more speculative alternative assets is certainly an appropriate part of a diversified portfolio. But what we are experiencing today in cryptocurrency is a bit like the “Wild West,” and just as brave homeowners in the past traced the paths of explorers in the Old American West, the potential inherent risks must be considered.

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