Identifying the Risks of Investing in Cryptocurrencies

It is not a secret that cryptocurrencies took the world of investing by surprise. Though many could indeed see the economy heading towards digitalisation, there were but a few that realised the path it was taking. In a way, crypto coins immersed into the economy using the back door, but today we see them occupying a very big part of its digital share.

Cryptocurrencies risk

Being Afraid of the Unknown

A considerable percentage of traders and investors are still sceptical about putting their money on digital assets such as cryptocurrencies. This scepticism is in many ways justified but when actual Ministries of Finance consider issuing digital currencies, why should the investors be afraid of putting their money on an asset that has already shown its potential for future profits? Arguably, the answer to that is that people fear the outcome of what can happen to the value of an assetnot protected by the regulations of an authority.

Regulation Is Important but Does not Secure Profitability

Every investment comes with risks, regardless of the form of the asset one invests in and regardless if that type of investment is traded according to regulatory frameworks. In many cases, an investment’s chances for profitable returns are as unpredictable as the chances of winning while playing games of chance. At any good baccarat casino, we expect one can find multiple versions of the game, but no version can guarantee that he or she will win or lose.

The chances of winning while playing casino games are pretty even and casino players can either leave the table with a loss or with lots of extra money in their pocket. The same applies to investing in cryptocurrencies, real estate properties, vehicles, stocks or commodities. With or without any regulation, the investment can generate serious profits, or it can lead to significant losses, affected by either positive or negative developments.

Cryptocurrency risk

Investment Threats Can Come in Any Form

Collective economic growth would probably be a sure thing if we could predict everything that can take place in the future. However, this is not the case as nobody can prepare for things that have not yet taken place. For example, nobody could foresee how the coronavirus would affect the values of financial assets, and nobody could say beforehand that an asset like Bitcoin would survive the coronavirus-driven market uncertainty.  Things happen all the time and markets either find a way to adapt and survive, or they fail to do so and then fall into recession.

What Can Owning Cryptocurrency Mean for You in the Future?

Money is not everything in life, but it is a medium that gives us more options to do the things we want to do, or to avoid doing things we would rather not do. If one were to consider that cryptocurrencies are a form of money and that this type of money is to be widely used for general payments, purchases or investments, then he or she would say that there is some worth in having it in our wallets.

Cryptocurrencies are financial assets for which society finds more uses every single day. This is something that can lead to a higher demand for owning cryptocurrency and thus to an increased value of every crypto coin. The level of the value increase is, of course, something that cannot be predicted, but when something is worth one dollar today, and tomorrow its value goes up by 15%, then that extra percentage is money, which you did not have the day before.