How much money you make with cryptocurrency is entirely up to you, not the crypto market. So, is cryptocurrency a good investment in 2022? Well, it’s possible to make millions of it. And it is also possible to not make a dime. Read on to find out more!
While many newbies worry about how much ROI they can get before venturing, experts think about the trade itself. You make a lot of money by learning the tricks of the trade.
Buying crypto early on is undoubtedly an excellent place to start. If you are new to the crypto world, you must have many questions. Questions like is cryptocurrency a safe investment? Which coin is most profitable this year? Is crypto a good investment? Don’t you worry, this article will let you in on all the secrets!
To gain direct exposure to the demand for digital currency, you should invest in cryptocurrency. Investments in cryptocurrency-related stocks are a safe but potentially less lucrative alternative. Let’s take a look at the positives and negatives of making a cryptocurrency investment. And this will help you decide if it is a good investment. Or not.
Is Cryptocurrency a Safe Investment?
Cryptocurrency is a risky investment for several reasons. There are, however, other indications that cryptocurrency will be around for the long haul.
As you may already know, cryptocurrency has its own set of dangers. Compared to traditional stock exchanges, cryptocurrency exchanges have a higher risk of hacking and other criminal activity.
Many exchanges and third-party insurers have begun offering protection against hacks after significant losses incurred by investors who had their digital currencies stolen.
Investing in cryptocurrencies is more complicated than investing in the stock market or bond market. Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH) can be easily purchased and sold on cryptocurrency exchanges like Coinbase (NASDAQ: COIN).
Still, many people prefer not to keep their digital assets on exchanges because of the risks of allowing any company to control access. A centralized exchange means that you don’t have complete control over your cryptocurrency. You could lose your money if an exchange went bankrupt or if the government requested that the exchange freeze your assets.
Some cryptocurrency owners prefer cold storage options like hardware wallets, but they come with challenges too! It’s impossible to access your cryptocurrency if you misplace your private key. And that’s the biggest concern.
A cryptocurrency project’s success is also not guaranteed if you invest in it. Today, many thousands of blockchain projects are scams, and the competition is fierce. Only a few cryptocurrency projects will succeed in the long run.
Governments that see cryptocurrencies more as a threat than a new technology may decide to crack down on the entire crypto industry, which would be a severe setback.
Investing in cryptocurrency comes with additional risks because the currency relies on cutting-edge technology. In many cases, the technology is still under development, and it’s yet to be perfect in real-world scenarios.
Is Cryptocurrency a Good Long-Term Investment?
The answer to this question is a qualified yes. Many cryptocurrencies, such as Bitcoin and Ethereum, are launched with lengthy-time horizons to achieve lofty goals. Even though a cryptocurrency project’s success is never guaranteed, long-term investors in a project that achieves its goals can reap significant rewards.
To be considered a long-term success for any cryptocurrency project, however, it is necessary to have many people using it.
Investing in Bitcoin for the Long Term
When Bitcoin becomes the most popular cryptocurrency, the network effect kicks in, making more people want to own Bitcoin. Many people think of it as “digital gold,” but it can also exist as a form of digital currency.
In contrast to fiat currencies like the U.S. dollar or the Japanese yen, investors in Bitcoin believe that the cryptocurrency’s supply will increase in value over time. Central banks can print any number of dollars they want, but the total number of Bitcoins in circulation is less than 21 million.
As fiat currencies plummet in value, many investors believe that Bitcoin’s value will rise. Some believe that Bitcoin has the potential to become the first truly global currency if we all use it as digital cash.
Investing in Ethereum for the Long Term
Investors interested in gaining exposure to the Ethereum platform can buy Ether, the platform’s native coin. In contrast to Bitcoin, Ethereum builds a global computing platform that supports a wide range of other cryptocurrencies and a vast ecosystem of decentralized apps (“dApps”).
With the Ethereum platform’s open-source nature and many cryptocurrencies built on it, Ethereum can also benefit from the network effect and create long-term, sustainable value.
Using “smart contracts” on the Ethereum platform is possible, which automatically execute based on terms written in the contract code. For every smart contract executed on the Ethereum network, the network collects Ether from its users. In the real estate and banking sectors, smart contracts have the potential to upend the status quo while also opening up new opportunities for businesses.
The value and utility of the Ether token increase as the Ethereum platform becomes more widely used. By owning Ether, investors who believe in the long-term viability of the Ethereum platform can directly benefit from this.
However, this does not imply that Ethereum is entirely free of competition. Solana (CRYPTO: SOL), Polygon (CRYPTO: MATIC), and Avalanche (CRYPTO: AVAX) are all “Ethereum Killers” built to handle smart contracts and use a blockchain system that can process more transactions per second.
In addition to being faster, users will also save money thanks to the lower operating costs. Despite this, Ethereum is the most popular platform for smart contracts.
Is Cryptocurrency the Best Investment?
Because cryptocurrencies like Bitcoin have traditionally demonstrated little price connections with the U.S. stock market, owning some can boost the diversity of your portfolio. It’s probably a good idea to add some bitcoin to your portfolio if you think it will become more widely used.
Be sure you have a solid investment thesis for each cryptocurrency you buy before putting your money into it. Do your study and learn as much as possible about the subject. And you can mitigate the risk of investing in cryptocurrencies.
There are other methods to profit from the rise of cryptocurrencies if buying bitcoin is too hazardous for you.
To invest in cryptocurrency futures, you can use an exchange like CME Group (NASDAQ: CME), which supports the trading of stocks such as Coinbase, Block, and PayPal. Investing in these companies can be lucrative, but they don’t have the same upside potential as investing directly in a cryptocurrency.
Several factors affect the riskiness of cryptocurrency. But it is overall a good investment.
The world is experiencing a daily adoption of crypto, which means the industry is close to maturation. It is safe enough for investing large sums of money, and if you do it right, you stand to gain a lot of profit.