Many people have heard about the cryptocurrency market. However, not everyone is willing to invest in it.
Before buying cryptocurrency, you need to figure out what its purpose is and why would you need it. Since there is a very small pool of safe cryptocurrencies, they might as well be considered as a good financial tool for long-term investment.
The rest cryptocurrencies are mostly a tool for speculation. Some really small cryptocurrencies are not worth dealing with at all, since they are subject to constant manipulation.
Of the 2473 cryptocurrencies that currently exist, it is very difficult to determine the best and the most risky. But among all, it is worth highlighting those that are included in the Bloomberg Galaxy Crypto Index - an index that tracks the 10 most liquid digital currencies.
The list includes: Bitcoin, Ethereum, Monero, Ripple, ZCash, Bitcoin Cash, EOS, Litecoin, Dash and Ethereum Classic. Therefore, it is recommended for beginners to diversify their investment portfolio with these cryptocurrencies and buy those with an investment horizon of at least 3 years
As for the value of cryptocurrencies, market participants predict a jump in prices. In particular, if the global financial markets show negative dynamics soon, it is likely that Bitcoin will soar above $ 15,000.
Investors will look for opportunities to generate additional income using cryptocurrencies due to the prevailing conditions of the current monetary policy, when leading central banks lower interest rates, and some countries even introduce negative rates.
Cryptocurrency Risks
Investments in cryptocurrencies, as well as any other financial instruments, carry certain risks. If we consider the short-term period, then you can face a strong price volatility. Over the year, it can vary around +/- 61% and not every trader can withstand such a change. The cost of cryptocurrency can fall to near zero values. For cryptocurrencies from the TOP-10, this is unlikely, but still real. Low probability compared to other coins is due to the fact that cryptocurrencies are used by the darknet, illegal and criminal businesses, in order to make payments. For the rest of the investors - this probability is much higher.
If you invest in the long term, the main risk may be the cryptocurrency system itself. As you might already know, Bitcoin is a fully decentralized system that does not have a single control center. Therefore, the entire responsibility for the security of access to the bitcoin addresses on which the bitcoins are stored lies with the users. And the loss of access to these addresses will lead to the loss of your funds.
In addition, transactions in this system cannot be canceled, nor can a change be made to an already sent transfer order. This means that in the case of an incorrectly specified recipient bitcoin address, the funds transferred will go to another place, and it will be very problematic, even impossible to return them.
Now that you know some details about cryptocurrencies and how they work, you can make an informed decision whether to invest in such currencies or not.
We hope you make the suitable decision!
