When somebody asked what are the good investments, other than the traditional investment items like stocks, mutual fund, real properties, jewelries and direct business, cryptocurrency has been the latest addition usually considered.
Aside from the traditional concept of diversifying investment to spread risk exposure, cryptocurrency can be considered one good investment for the following reasons:
- Nascent Financial Technology
Being a new financial technology, cryptocurrency has a great potential in terms of the increasing number of players as well as the continually growing capital base. Early adapters and investors benefits much as demand of cryptocurrency rises due to the continual expansion of utilities and practical applications. The potential is not basically limited to cryptocurrency per se, but to the technology behind the creation of various types of cryptocurrencies. That is blockchain technology of which the pioneering Bitcoin is created, or the more generic encompassing term – distributed ledger technology or DLT, that has various uses and real life applications across various industry sectors.
- Easy Acquisition and On-Boarding
It is very easy to acquire cryptocurrency, especially for people who have the money to invest in cryptocurrency exchanges and other online trading platforms. With just little amount, anyone can formally start investing in cryptocurrency unlike other traditional investment products. In fact, there are even opportunities to acquire some promising cryptocurrency for “free” mostly from start-up crypto projects, for those desirous to explore and learn this financial technology without initial cash outlay.
- High Rate of Return
It is common observation that cryptocurrency, particularly well known cryptocurrency and third generation altcoins, provide higher annual yield of around 100% on the average, compared to stocks usually ranging from 10-15% or even much lesser. Of course rate of return largely depend on the degree of price dip during the time of entry, and the right timing when to unload and cash out at peak prices.
- High Liquidity
Another advantage of cryptocurrency is its high liquidity. Unlike physical assets like real properties and jewelries, it is much easy to sell cryptocurrency in exchanges, whether in centralized or in decentralized online platforms. Trading, converting and swapping cryptocurrency with another coins and tokens, or to fiat money can be done manually or through auto-trading system available in a number of apps and online sites with the use of mobile phones, laptop and desktop computers.
- High Price Volatility
While it is true that cryptocurrency prices is highly volatile, being as it is can also be considered an advantage. Of course, this practically depends on how a potential investor will make use of this particular nature in this digital asset to one’s benefit. Everything depends on the right approach and investing strategy to generate highest possible return on a particular situation and investment timeline.
- Scant Regulation and Limited Government Policies
To date, most government and regulatory authorities are still on the learning curve on this digital asset transactions. Policies and relevant laws are still being crafted in a number of countries. That may still take years in some before more comprehensive laws and regulatory mechanisms will be in place.
Risk and Due Diligence
Like any other productive endeavor however, it is worthy to note that investing on cryptocurrency has its inherent risks. Moreover, it should also be worthy to remind those interested to explore that there are also bad players in the crypto space, just like any other sectors. Investment scam and dubious investment mechanism always abound when there are income opportunities exist. More so in cryptocurrency that as for now, still a very few segment of the population is familiar of it. Therefore, it is advised that before making any move, a careful due diligence study and thorough research must be undertaken before making important investment decision.
Aside from selecting which exchange platform to use, choosing what particular cryptocurrency to buy and be included in one’s portfolio from among the several thousands of cryptocurrencies available in the market, is a great challenge.
Fortunately, there are numerous resources readily accessible online that can help and guide anybody willing to learn and venture in the cryptoverse nowadays.