But even more interesting is the fact that cryptocurrency is also a great investment platform because of the high rate at which the value of the currencies increases over time. More like forex trading, cryptocurrency investors buy money at a specified rate and sell when the value has increased significantly. That's the plan, however, but it doesn't always go that way. Just like any other buying and selling business, different market factors affect how much profit or loss you would make at the end of each trading cycle.
Whereas I will not talk more in-depth about cryptocurrency investment, I will seek to highlight some pros and cons of the trade just in case you are still contemplating on joining the investment platform. This will give you a broad view of cryptocurrency trading so that your decision can be more refined and justifiable to yourself.
Which do I start with? Pros or cons first? Let me toss the coin to see, head for pros, tail for cons.
#coin tosses, head wins
So, pros first. Let's go now!
Pros of Cryptocurrency Investment/Trading
- Potential for massive returns
- Safe Investment
- Shorter growth time
- Increased liquidity
- Clear direction of action
Potential for Massive Returns
One of the statistics that makes everyone consider investing in cryptocurrency is that $1,000 invested in Bitcoin in 2013 would be worth over $400,000 today. That's like over 4000 per cent increase in worth within the last 8 years. Since then, a few other cryptocurrency companies have been invented but Bitcoin remains the most expensive cryptocurrency as at today.
But that's not the only compelling example. Stratis raised $600,000 during their ICO in June 2016 and has since seen a 63,000 per cent rise in the price. Spectrecoin raised $15,000 in January 2017 during their ICO and has since risen over 13,000 per cent. There is great potential for massive returns in cryptocurrency trading.
Shorter Growth Time
When you purchase equity in a startup, in order to realize a profit, you need to find someone to buy the equity from you or wait for an acquisition or IPO to occur. However, none of these options allows you to control when you cash out your investment.
If a cryptocurrency ICO is able to build a solid enough network, such as the 56,000-member Datum network, investors immediately have much more liquidity and can sell their cryptocurrency almost instantaneously. In other words, it doesn't take much time before you find a potential buyer.
Clear direction of action
Perhaps the biggest advantage of investing in cryptocurrency ICOs over startups is the fact that startups often need to pivot multiple times and overcome initial speedbumps. When you see a set of founders asking for initial capital, you should recognize that the company they eventually take public will look drastically different.
With a cryptocurrency ICO, when you invest you know exactly what the network does and will be doing. As such, you are able to more accurately evaluate the product-market fit for the platform and can use that insight to determine your investment.
Cons of Cryptocurrency Investment
- Increased volatility
- Potential network stall
- Potential shortage of resources
- Legal issues
- Potential mismanagement and bankruptcy
Potential Network Stall
Potential Shortage of Resources
Potential Mismanagement and Bankruptcy
With new investment possibilities cropping up every day, it is critical to keep up to date with what options you have for wealth management. While portfolios need to be balanced, good portfolios tend to include some riskier assets, such as venture capital.
With a major emphasis on initial coin offerings(ICO), you have seen the pros and cons of investing in cryptocurrency. The aim was to familiarize you with both sides so you can make the right decision that suits you as far as cryptocurrency investment is concerned.
In the modern world, cryptocurrency ICOs offer many benefits that venture capital is lacking. When you start thinking about investing, take time to look into what ICOs are available and how their success might be able to generate massive returns for you. Also, don't forget to factor in the risk and find ways to minimize them as much as possible.