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Cryptocurrency investments: risks & pros associated

14th Feb 18 11:12 am

Read on to learn more on Cryptocurrency

Cryptocurrency, a relatively new kid on the block, is attracting every small, medium or large investors who are looking to making stupendous gains on their investments. But are the impressive gains guaranteed? Is it safe to invest in cryptocurrencies? These are the questions which haunt every investor who is looking to invest a fortune in cryptocurrencies with a hope of making a massive amount of gains.

We hope to answer few of these questions for you in this post. Please find detailed below the benefits and the risks associated with cryptocurrency investments.

Before going to the risks associated with investing in virtual currencies let us have a look at some of the amazing benefits that cryptocurrency investments will offer you:

Cryptocurrency Investments: Benefits, Pros & Advantages

Prevents Fraud or Dupery

This benefit is understandable, as the cryptocurrencies are virtual or digital in nature; they cannot be counterfeited or duplicated. Moreover, the transaction once done cannot be reversed by the sender.

“Push” Mechanism of Transaction

The regular credit or debit cards which you use; perform a transaction on the basis of a “pull” mechanism. This means that when you enter your credit or debit card PIN on the point-of-sale terminal; the payment is commenced, and the terminal pulls the required amount, which you need to pay to the merchant, from your bank or credit card account.

But if we see the case of cryptocurrencies; they work on the basis of a “push” mechanism; i.e. the holder of the virtual currency can send exactly that information which he or she wants to send to the merchant and not expose the entire credit line or our precious information to the merchant. This mechanism of transactions protects you from any kind of identity theft.


Unlike the traditionally printed currency; which is controlled and regulated by the government; cryptocurrencies are decentralized.

This means that there is no central authority controlling the cryptocurrency. Instead, the network of virtual currencies is operational on a peer-to-peer basis which means that every user acts like a node on the network and is responsible for maintenance of the entire network.

Not Controlled by Boundaries or Borders

Cryptocurrencies are universal in nature i.e. they are accepted all across the globe as a single unit and doesn’t require any kind of exchange. For example, if you go from the USA to England; you are required to exchange your dollars to pounds and vice-versa.

But this is not the case with cryptocurrencies. Virtual currencies can be used in their same form, in any part of the globe irrespective of any kind of international borders or demarcations. This, in turn, saves a lot of time, money and efforts which are spent unnecessarily on transferring or exchanging traditional currencies across international borders.

Elimination of When you go to buy a property or do any kind of legal transaction; you obviously require a lawyer or any other related official person to be with you to stamp your transaction with his/her official seal.

But if you involve smart contracts, as in cryptocurrencies, then there is absolute, no need of any kind of third party approvals or put any kind of witnesses; thus saving time, efforts and the extra money involved.

Elimination of Transaction Delays

Almost, all cryptocurrencies out there, settle the transaction in few seconds with zero fees levied to you. However, if the transaction is performed with the assistance of third-party services, such as Coinbase, a small transaction fee is levied when the cryptocurrency is transferred from its respective wallet.

Safe and Secure Transactions

The utilization of public and private keys ensures a proper security envelop over your transaction. Also, the online ledger, on which the transactions are recorded, called the blockchain can be transferred to every computer. This ensures that honesty prevails among all transactions as transactions get verified giving the required level of transparency.

No Limit on Gains

If one is careful, while utilizing his/ her funds for investment purposes, and does a proper research before jumping on to the investment plans then there is absolutely no limit to the number of gains that a person can make with investing in virtual currencies.

However, two things must be kept in mind here; invest that much amount only which you can afford to lose and gradually build up plus proper research is mandatory before investing your hard-earned money. If a person keeps these two things in mind; he/ she can make a stupendous amount of gains in the world of virtual currencies.

Moreover, all those people who don’t have access to a normal money exchange can reap the benefits of the cryptocurrency market as there is absolutely no stoppage on anyone from entering. All you need is a solid internet connection, a smartphone or a laptop/ PC.

Safe from financial and political instability

If the government goes down due to a political turmoil, fiat or traditional currency will immediately lose its recognition or become highly unreliable. If such kind of event takes place then those who have invested in cryptocurrencies or are in possession of the virtual currencies will definitely be safe in financial terms as it is already explained above that value of cryptocurrency doesn’t depend on any kind of political recognition or international boundaries or demarcations.

Cryptocurrency Investments: Risks, Cons & Disadvantages

Not Government Supported

You already know that cryptocurrencies are not government backed or supported. The value of cryptocurrency is not decided by the government but by the people who are buying or investing in it. The amount which the people pay or are willing to pay for it; decides its price. So if a major part of the group of persons decides to stop using a particular cryptocurrency; or if a cryptocurrency is shut down; or if somebody sues a virtual currency; then there is a high possibility that you could lose

Third Party

everything whatever you have invested in that particular cryptocurrency. You could lose all the gains that you have made along with the amount which you invested.

Hence, there is a very high possibility; while dealing with cryptocurrencies; that you could lose everything.

High Volatility

The cryptocurrency market is highly volatile. The fluctuations in the market cannot be predicted. At one moment, you are at the top and the very another moment you can come crashing down.

All is Mathematics

The normal; traditional fiat currency that you use is backed up by the government and is printed according to the gold reserves a country has. There are physical coins as well as notes of different denominations representing the fiat currency.

But, if we take the case of cryptocurrencies; there are no physical coins or notes and neither there is any central repository for the same. All are in mathematics and computers. Hence, it is understandable that you must keep a backup of all your virtual holdings. So that, in case your online wallet crashes you can lose your entire balance.

Fake Decentralization Claims Cryptocurrencies are a “hot” topic nowadays and every day you hear one or the other ICO (Initial Coin Offering) coming up highlighting their plans and claiming that the network is purely decentralized and is based on a blockchain.

However, in some cases, the firm falsely claims that their network is decentralized while in reality the major part of it might be centrally controlled. So you should be very careful of such fake claims and enter into the world of cryptocurrency with a serious mind and proper research.

Cryptocurrencies: The Future

Hence, keeping in view, the above-mentioned advantages and disadvantages of cryptocurrencies, it can be concluded that the technology of virtual currencies is getting better with each pas
sing day and they may have a bright future ahead as printing physical notes is a time consuming and costly process. With more and more people using the internet and online payments for their day to day purchases; physical notes may become disused, obsolete and non-current.

But, still a long way is there for virtual currencies to cover; if they want to replace credit cards, debit cards or traditional fiat currencies in totality. Majority of the persons, still, lack knowledge of cryptocurrencies and proper knowledge is essential before everybody turns to the use of virtual currencies. Also when cryptocurrencies start getting widely used, more and more businesses will start accepting cryptocurrencies as the mode of payment for their services or products.

You can make a good amount of profit when you invest in cryptocurrencies, and https://www.100bestcryptocurrency.com/ is a good place to start. However, it is vital to understand that in spite of having a big potential of making a massive amount of gains; investing in cryptocurrencies does come with a lot of risks and serious research is mandatory before jumping into the cryptocurrency investment’s bandwagon. So, if you are thinking of investing your savings in virtual currency then do your studies, keep the risks in mind and take properly researched steps on the path of cryptocurrency investment.

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