Is it wise to invest in cryptocoins?
Garey It's possible to get filthy rich by investing in cryptocurrency. But you could also lose all your money. How can both of those things be true? Well, like most investments, crypto assets come with a host of risks but also vast potential rewards.
Let's take a look at some of the key aspects of the cryptocurrency market and whether it makes sense for you to invest in digital assets.
Is crypto a good long-term investment?
Whether crypto assets pay off for investors will ultimately be determined by whether they achieve widescale adoption.
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Bitcoin, for example, is seen by many as an investment akin to gold. Unlike fiat currencies, such as the U.S. dollar and Japanese yen, that can be printed seemingly at the will of politicians, Bitcoin has a maximum supply of just under 21 million coins. Many investors thus view bitcoin as a scarce asset that could increase in value as fiat currencies depreciate. Others believe bitcoin could eventually gain widescale use as a digital form of cash, with some going so far as to say it has the potential to become the first truly global currency.
Ethereum, meanwhile, wants to serve as a global computing platform. It serves as a launchpad for decentralized applications, or "dapps," which are open source and not controlled by a single organization. Ethereum allows the use of smart contracts, which have their terms written directly into code and can be executed automatically. These technologies could disrupt massive industries, such as real estate and banking, and potentially create entirely new markets.
If bitcoin and Ethereum can achieve these aims, then investors who buy their tokens today will likely be richly rewarded in the years ahead. But there are many other projects competing with these cryptocurrency leaders, and their success is not assured by any means.