Cryptocurrencies have produced a slew of millionaires and multi-millionaires over the last decade. However, they were taking a risk by risking losing all of their money. Is this thinking causing you to be conflicted? Are you debating if cryptocurrencies are a good investment? Let's have a look.
If you want direct exposure to the demand for digital currencies, cryptocurrencies are an excellent investment, but buying shares of firms that deal with cryptocurrencies is a safer option. Cryptocurrency mining stocks are another option to think about.
There are numerous aspects that play a role in this debate. To begin with, bitcoin is a very new market with high volatility. As a result, there is no assurance of rapid success or profits after investing. Second, bitcoin exchanges are susceptible to hacking and illegal activity. Many crypto investors have lost a lot of money as a result of these security vulnerabilities. So think about whether you can afford to take that chance.
Let's take a look at how cryptocurrencies will perform in the long run.
Keeping bitcoins secure is more harder than purchasing them. Crypto exchanges such as Coinbase make buying cryptocurrencies simple, but investors will require crypto wallets to keep them. Crypto storage or crypto wallets have drawbacks, such as the risk of losing your private key, which prevents you from making crypto transactions or accessing your assets. There's also no guarantee that the cryptocurrency project (business) in which you invest will succeed. There is a lot of competition in the blockchain market right now because there are so many projects. The government's feud with the crypto business is another risk associated with crypto investment.
Despite these obstacles, the bitcoin and blockchain industries are expanding on a daily basis. Some governments are letting their financial institutions to make the required changes to meet the crypto needs of their customers. Individual crypto investors and professionals are also getting tools to protect their crypto investments. Multibillion-dollar corporations are also putting money into cryptocurrencies in the hopes of a future boom. In early 2021, Tesla, for example, purchased US$1.5 billion worth of Bitcoin.
Long-term investments in popular cryptocurrencies
Bitcoin and Ethereum are the two most popular cryptocurrencies. Let's have a look at how these two digital coins, which are currently first and second in the cryptocurrency market (based on market capitalization), will do in the future.
Because Bitcoin is owned by so many individuals, it benefits from the network effect, which means that people desire to own it. It's now referred to as "digital gold," and it's credited with making many people wealthy. Experts believe Bitcoin's value will climb slowly because the supply is limited. Bitcoin dominance proponents say the cryptocurrency will one day become the world's first truly global currency.
Ether is the native coin of the Ethereum platform, which was the first of its kind to allow smart contracts, giving the DeFi sector a boost. Ethereum is digital silver, whereas Bitcoin is digital gold. There are a number of apps created on Ethereum's platform that provide Etherum with numerous potential to benefit from the network effect and generate long-term value.
In exchange for executing smart contracts, the Ethereum network takes Ether from users. The Ethereum platform is being more widely used in banking, real estate, and the creation of other cryptocurrencies, enhancing the utility and value of the Ether token. On the basis of utility, some argue that Ether has a brighter future than Bitcoin in the long run.
The Final Decision
If you've already invested in equities and bonds, you can put some money into cryptocurrencies and expect only long-term gains. If you believe that cryptocurrency use will grow over time, and that Bitcoins and altcoins will be utilised for their intended purpose of becoming a legitimate form of payment, then investing in utility cryptocurrencies makes sense. If you're hesitant to buy cryptocurrencies, consider investing in stocks that support them instead.
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