Is Investing in Cryptocurrencies a Good Idea?

A Cryptocurrency, or Cryptocurrency, is a digital currency designed to function as a medium of financial exchange where only individual coin ownership data is kept in a distributed ledger based in a digital computer program. This type of money is not backed by any physical commodity such as gold or silver. This virtual money system can be traded online or offline just like any other virtual money system without the need for a third party to act as a mediator. There are many uses and examples of Cryptocurrencies.

A number of Cryptocurrences have emerged like the Dollar Online Exchange that allows individuals to trade the USD and several other major currencies including the EUROS, NZD, GBP, CHF, and the CANADA. However, many others are coming up claiming they are the best of breed or at least the most efficient, however they all work under the same principles of the virtual currencies which are backed by no physical asset. Many people use Cryptocurrencies as an investment tool because unlike the stock and bond markets, the value of Cryptocurrencies never decreases. However, if a mass amount of investors converged on a single Cryptocurrency due to market failure or an equally catastrophic event, then the value would decrease significantly.

There are many advantages and disadvantages associated with investing in Cryptocurrencies versus investing in stocks and bonds. One of the most obvious benefits is the low risk involved with using Cryptocurrencies as a trading vehicle. Investing is done virtually via online brokers who act as intermediaries between you, the investor, and the actual Cryptocurrency dealer which are usually a centralized server controlled by the creators or investors of the token. You can buy and sell your tokens from anywhere in the world at any time with instant access.

However, one of the largest risks associated with investing in Cryptocurrencies is associated with the existence of what are called “scammers”. This term is used fairly loosely and may actually apply to any person, company, or entity that you deal with. One of the biggest concerns about scams is that they will use misinformation or hype in order to separate you from your hard earned money. Many of the so-called “scams” out there are in fact working with individuals who have no business experience or knowledge about how the process works. For instance, when a well-known figure such as Vitalik Buterin claims that ether is going to be the next big thing, it is often times a Cryptocurrency scam, simply because no one knows what he’s talking about.

Another major risk associated with investing in Cryptocurrencies is that they are not widely accepted across countries or industries. In the past, there were a handful of Cryptocurrency platforms, such as Bitfenrix and Metacafe, but today there are hundreds upon hundreds of them. This is due to the fact that governments and financial institutions in several countries have been slow to get involved in promoting or marketing these currencies. The lack of marketing has created a void in the marketplace and has resulted in lesser than optimal liquidity and increased risk for investors. Many Cryptocurrencies currently do not function in the same manner that their counterparts do, which makes them less valuable, less liquid, and more difficult to purchase on a large scale.

Despite the risks associated with investing in Cryptocurrencies, there are several distinct benefits as well. First, there is the opportunity to diversify your portfolio. While not all Cryptocurrencies will perform in the same manner, you will find a wide array of different types of altcoins to invest in. Additionally, many of these different types of altCoins can be purchased and sold online with relative ease, creating a cost efficient way for many investors to participate in the trading of Cryptocurrencies. Finally, by having the ability to track real-time market data, you can make informed decisions regarding the value and availability of different types of coins and their respective investors.