What are the Pros and Cons of Cryptocurrency Investment?

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What are the Pros and Cons of Cryptocurrency Investment?

The rise in the value of cryptocurrencies over the past decade has attracted a growing of international traders, investors, and speculators. This entire decentralized financial ecosystem which is based on blockchain technology looks exciting, and it is indeed, but can cause disappointment when not properly understood.

All over the world, governments, agencies, and corporations are trying to understand the technology and create legal frameworks, such as for cryptocurrency and taxes. At the same time, traders and investors are looking to cryptocurrency as an investment, and this has both its pros and cons.

Security

Based on decentralized technology, cryptocurrencies are not controlled by any one institution or company. Dedicated software is incentivized to update and maintain ledgers to ensure that data is correct and valid. This data includes details on each individual crypto coin, and it ensures that no duplicates or double payments are possible. As a result, investing in cryptocurrencies is safe.

Security starts to become a concern when trading currencies since you need to use exchanges or wallets. Here the security depends on the product itself, with the major exchanges such as Binance and Coinbase Pro being normally safer than much smaller alternatives.

Safe Investment

Cryptocurrencies, in general, are seen as a safe investment as they have a general upward trend. There are hundreds of currencies and not all are considered to be safe. However, you should always look to invest in the best, most reputable cryptocurrencies.

The industry is gaining legitimacy from regulators and international organisations, which are working to seek ways to implement the technology and solution they provide to develop existing systems. As a result, this has attracted more institutional investors and even university endowment funds. Larger corporations, such as Facebook and Twitter, are also looking to enter this sector, which will further push cryptocurrencies into mainstream use.

Legal

The legal perspective of cryptocurrency investments is debatable and various considerably from one country to the next. Countries like Malta and Singapore have already taken steps to enshrine cryptocurrency and blockchain use in law and many other countries are following suit. There are seems to be a reluctance in some countries, such as the United States, to take a firm position on the subject, leaving individual states to decide themselves.

This situation causes uncertainty and concern, especially for institutional investors. The general trend seems to be to regulate rather than eliminate, which is a good sign that matters will only improve henceforth.

Not Tangible

Traditional investors sometimes complain that investing in cryptocurrency is putting money in something that doesn’t exist. This is true, up to a certain point. Today even fiat currency, together with huge volumes of data and services exist only in virtual form. There is nothing tangible, but that doesn’t make the data any less valuable.

Cryptocurrency is very similar to fiat currency, you can store it safely in crypto wallets, use it to purchase goods and services, and transfer it to third parties.

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