Cryptocurrencies as an investment Opportunity

Cryptocurrency is one of the most exciting investment opportunities to emerge from the digital world. As an asset class, it’s already worth billions and is growing at a rapid rate. Thousands of people buy, sell and trade cryptocurrencies every day. It’s simply not possible to ignore this asset class anymore. A lot of people see cryptocurrencies as an investment opportunity.

Cryptocurrency has grown rapidly and is the fastest growing asset class in the world with a total market size of over $130 billion. And while there are many positives to directly investing in crypto assets such as bitcoin, there are also multiple risks that negatively impact returns. The volatility of these currencies is much greater than of any asset class out there with coins having lost up to 90% or more of their value over a short period of time (i.e. 17% on Aug 24, 2017).

Additionally, the risk of fraud and theft is much greater in the crypto space, with many exchanges having been hacked and a significant amount of funds lost over the years. As a result, many professional investors have stayed away from investing in this space until recently.

What kinds of cryptocurrencies are there?

There are different kinds of cryptocurrencies, or “coins”, just like there are different kinds of real money. Some coins have a big network behind them and many people use them to exchange goods and services globally across the internet without middlemen. Some currencies are more valuable than others.

By investing directly in cryptocurrency through exchanges like Coinbase or other providers, you have limited recourse to recover your funds should something go wrong. Here are some strategies that will help you make the most of it:

Buy low, sell high – using the classic investment strategy, users can increase the value of crypto by buying and holding coins. The buying increases demand and hence crypto value increases. Mining – the act of mining Bitcoins or altcoins can be profitable. It also impacts the supply of cryptocurrencies. Sign up for an exchange – signing up for an exchange is a good way to buy and sell cryptocurrencies.

Exchanges provide a place where buyers and sellers meet. A little knowledge – knowing what you are doing before you trade is wise. For example, investing in a particular coin because it has been highly recommended by a friend may not necessarily be wise if the friend doesn’t have the background or experience to make such recommendations. Appreciate volatility – although volatility is an obvious downside, it can be an opportunity.