Blockchain technology and crypto currency have seen rapid growth in recent years. The speculative fever fueled this growth, as did the rise in interest in the currency itself. Fortunately, the cryptocurrency and blockchain technology industry is becoming a more mainstream force, with big players validating its promise. But despite the booming industry, is it really a good investment? We’ll explore these questions in this article. But first, let’s examine the potential for cryptocurrency.
As with any other type of investment, crypto can be a risky proposition. To minimize risk, you should only invest a small percentage of your portfolio in this currency. A common guideline is to limit such investments to ten percent of your portfolio. For the most part, you should shore up your retirement savings, pay off debt, and diversify your portfolio with less volatile funds before investing in crypto. While the volatility is high, the potential return on investment is great.
But you should know that crypto is not for the average person. It has a few kinks, and many people who aren’t familiar with it should stay away. In addition, some speculation doesn’t make any sense at all. As such, you should only invest in cryptocurrency that you fully understand. The benefits outweigh the risks. For example, cryptocurrency may be a good investment if you invest the time and energy into it.
While many people think that investing in cryptocurrency is a good idea, not all financial advisors agree. For example, Peter Palion, a certified financial planner, thinks it’s safer to invest in a government-backed currency. However, Ian Harvey, a New York-based wealth advisor, says that it’s worth investing in a cryptocurrency if you understand the risks and rewards. This way, you’ll avoid the pitfalls of investing in a cryptocurrency when it’s at its peak.
While cryptocurrency is becoming increasingly mainstream, the legitimacy of its projects isn’t easy to check. While a cryptocurrency’s legitimacy is boosted by detailed prospectuses, it’s still a gamble, so research is essential. Remember, investing in cryptocurrency is not a smart idea for everyone, and there’s no universal law governing it. Aside from the risks, the currency is legal in the U.S., although the currency has been banned in China. In addition, the use of cryptocurrency may not be allowed in all states.
There is no insurance for cryptocurrency transactions. In contrast, bank accounts in the U.S. are insured by the Federal Deposit Insurance Corporation (FDIC), which covers up to $250,000 per account holder. The potential for losses on crypto is high, and investors should back up their funds regularly. Regardless, it’s a good idea to have a backup of your private key. It’s important to note that cryptocurrency prices fluctuate rapidly, making them difficult to use for payment.
Although cryptocurrency may be a good investment, it is not a financial democratizer. In fact, experts in financial access talk about turning the post office into a bank, and even talking about the idea of turning the post office into a cryptocurrency will not help a common person obtain financial access. As such, crypto is not a perfect solution, but it is definitely worth looking into. It has many benefits, but some drawbacks. While the technology is here to stay, it’s worth taking the time to understand the fundamentals before investing in the crypto market.