Job Kimani Nganga

RISKS AND BENEFITS OF INVESTING IN CRYPTO Investing in crypto has significant potential benefits, but there is also a minefield of risks involved. This article aims to highlight the risks and benefits of investing in cryptocurrencies: Benefits of investing in cryptocurrencies High historical returns. Crypto has historically returned handsome price growth, especially for the early investors in coins such as Bitcoin. Those who have ridden out the major volatility cycles have made huge gains and returned their initial investments many times over. Secondly, crypto is traded globally. Thus, for the investor who wants to trade with global investors, and hedge against forex and stocks and bonds which are always tied to a specific economy, crypto offers an intriguing option Thirdly, crypto is secured in very high-tech cryptographic techniques. This secures transactions and the value of the investor since these wallets are incredibly safe from hackers. The fourth benefit of investing in crypto is the transactions are incredibly efficient. One can buy and sell one’s assets in a matter of minutes, with minimal government, and regulatory interference, unlike traditional transactions in bonds and mutual funds which normally take days and are highly taxed and charged by banks and stockbrokers. Fifthly, crypto provides privacy. For investors who do not wish for their true wealth to be exposed, crypto offers an enticing option. This is because the users’ identities after transactions are made remain clothed in pseudonyms. Risks of investing in cryptocurrencies Firstly, crypto is incredibly volatile. Prices swing dramatically in a matter of hours, wiping out the life savings of investors. Always take care to invest what you can afford to lose. Secondly, cryptocurrencies are very lightly regulated. Governments are still navigating this new investment class, and this legal lacuna has created a lot of uncertainty, which leads to volatility and danger for uneducated investors. The third risk of investing in crypto is the high risk of market manipulation. Many times, famous athletes, actors, and celebrities have been involved in highly sophisticated market manipulation tactics, including pump and dump, fake news, disinformation, and coordinated trading efforts. This has led to price distortion, and many novices’ crypto investors being duped when the schemes crash down. Fourthly, crypto lacks intrinsic value. This is one of the major concerns when one buys crypto. The tokens do not generate income, or have underlying assets, like stocks or bonds do. The real value of crypto is what another investor is willing to pay for it; that is, it is a speculative asset. It is important to always keep this in mind when investing in cryptocurrencies. The fifth major risk of crypto is the likely loss of private keys. If an investor loses access to their private keys, either due to hardware malfunctions or viruses, they will lose their cryptocurrency holdings and potentially thousands of dollars in assets. Conclusion Cryptocurrency is here to stay, and more investors who prefer anonymity, fast transactions, and an asset that can gain multiples of value in a matter of weeks are choosing to buy their tokens. It is important to always keep the risks at the back of your mind while trading in this exciting, fraught, and risky asset.