Can digital cryptocurrencies still be invested?
John 4 THINGS TO KNOW BEFORE INVESTING IN CRYPTOCURRENCY
Okay, y’all, I’ve got my coaching hat on. I might even get a little riled up! Before you say good-bye to your dollars and hello to Bitcoin or Ether, there are a few things you need to know.
1. Cryptocurrencies are volatile. The value of cryptocurrencies goes through extreme ups and downs. In 2017, the value of Bitcoin swung between $900 and $20,000!2
Someone sneezes and the price drops! Investing in cryptocurrency is risky, to say the least. Of course, all investing carries a degree of risk. But you should always avoid unnecessary risks, especially when it comes to your hard-earned money. Don’t play poker with your financial future.
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2. There are lots of unknowns. There’s still a lot that needs to be ironed out with how cryptocurrencies work. Think about it: Nobody even knows who the founder of Bitcoin is! Relatively speaking, only a small percentage of people in the world understand the system and know how to operate it. Ignorance makes you vulnerable. I always advise people that if you can’t explain your investments to a 10-year-old, you have no business investing in them, to begin with. You’re setting yourself up to do something stupid.
3. Cryptocurrencies can be used for fraudulent activity. People who want to remain anonymous and avoid regulation from banks or the government will use cryptocurrencies to make shady deals on the black market. Money laundering is also a problem in the crypto world. Now hear me on this: I’m not saying that everyone who uses cryptocurrency is a bad person. But I am saying that if someone wants to commit criminal activity and avoid being tracked, the crypto world is an ideal place for them.
4. Cryptocurrencies have an unproven rate of return. Trading in cryptocurrency is like gambling. Because it’s exchanged peer to peer without any tie to regulatory standards, there’s no pattern to the rise and fall of its value. You can’t predict changes or calculate returns as you can with growth stock mutual funds. There just isn’t enough data, or enough credibility, to create a long-term investing plan based on cryptocurrency.