cryptocurrency risk

The Risks and Rewards of Investing in Bitcoin

The market of cryptocurrencies has seen a boom in the past few months to a year. Those investors who are in favor of the digital currency boom has stated that it is incredibly easy to use, and those who are not in favor state the opposite.

The ease of use is debatable but at the end of the day, using bitcoin is as simple as sending an email. The only thing that the parties involved in a transaction need to know is the other parties wallet number.

Since bitcoin still makes up around 40% of all cryptocurrency market capitalization or market cap, it has a tremendous grasp on the industry as a whole. Bitcoin was in fact the first cryptocurrency and still the most popular and easy to use. It also holds the highest amount of liquidity because of this.

What’s so enticing about bitcoin and all cryptocurrencies is that they are decentralized. This is the main premise that attracts so many to investing. Unlike a fiat currency, where it is backed by an entity or physical value, cryptocurrencies are backed by the market as a whole. The current market capitalization of the entire global market behind cryptocurrencies stands at around 138 billion dollars. Given their increasing popularity, this number is expected to rise. Although, a word of caution should be stated given their extreme volatility.

The volatility has been one reason that some have chosen not to get involved. Cryptocurrencies can often be based on speculation which can be the cause of rapid price fluctuations. One aspect that protects against this is the wide market array. Cryptocurrencies do not have borders, which ensures that if one market is not doing well, there is still a world of markets that can help to bounce back.

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Cryptocurrencies have seen mass fluctuations in price but have seen giant increases in price as well. Time will tell what happens to this new and emerging market.

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