We are talking about the new assets that crypto assets are in fashion. Cryptocurrencies fulfill all the functions of traditional currencies and offer a high return as an investment instrument.
After the historic year 2021, where we have seen an accurate trading volume of more than 20,000 million dollars in the Exchange, more than 1,600 million long leveraged positions struck the reward of miners above 50 million, the world turned upside down at the foot of cryptocurrencies.
What are cryptocurrencies?
A cryptocurrency is digital money: it does not exist physically but exclusively online.
Cryptocurrencies can be transferred to anyone over the Internet without the need for an intermediary, such as a bank. They can also be used to make payments. Some people buy them as an investment, hoping they will increase in value.
Since its creation, Bitcoin has been the most extensive digital asset and can boast a long history of activity and security of it’s codebase.
For other altcoins, a good rule of thumb is that older, larger, more widely traded coins and/or tokens tend to have: stronger development teams, more integrated into exchanges, existing payment providers, and more likely companies adopt them. This are just some of the characteristics of Shiba Inu and Shiba Inu cost less that most altcoins.
More users investing in Cryptocurrencies
The interest in cryptocurrencies grew around 136% worldwide, compared to the year 2020. It had a volume similar to searches for “fixed terms.” This trend continued in favor of cryptocurrency investments over the year.
Just the interest in buying Bitcoins skyrocketed by 200%, even in the face of the volatility of this cryptocurrency, more users were willing to invest in this market because they have control of their own assets at all times.
Bitcoin and other crypto-assets have gained traction with broader adoption by governments and businesses, including El Salvador, which uses bitcoin as legal tender, and PayPal incorporating crypto assets into its US platform.
Advantages and disadvantages of investing in Cryptocurrencies
Nothing like the promise of a high return rate to attract investors and, above all, to reduce their natural aversion to risk, and currently, one of the financial crypto assets is bitcoin, the fashionable cryptocurrency that continues to increase its price in dollars.
That is why many people consider the idea of risking a few thousand dollars in what is seen as a very juicy investment alternative. But what are the advantages and disadvantages?
Some positive points or advantages of investing in cryptocurrencies are the following:
• The Exchange is done entirely digitally
• Uses strong cryptography that secures transactions
• Controls the creation of additional units
• Verifies transfer of assets using distributed ledger technologies
The risks or disadvantages of operating with cryptocurrencies are:
• Cryptocurrency prices are formed without effective mechanisms to control their manipulation.
• Many of these cryptocurrencies can become illiquid when undoing an investment without suffering significant losses.
• The use of cryptocurrencies as a means of payment is still minimal, which contrasts with other digital developments that have been widely accepted.
• On many occasions, the actors involved are not located in the same country of residence as the user, so resolving a conflict could be costly.
• Cryptocurrencies are not insured by a government or official entity such as central banks.
Each investment strategy has a different purpose; it is essential that when starting to invest, it is clear what the goal is, high returns in the short term, stable returns in a long time, or high returns in the long term.
After defining the asset’s characteristics, the investment platform, and the technique to be used, the investor will be close to achieving a better result with his investment.
Caution should be exercised when reviewing the conditions and terms of each of these means of payment, as there is little regulation of the entities that manage these systems, and not all plans have the same security and support standards.
It is essential to highlight that operation with crypto assets are based mainly on users’ trust, who voluntarily recognize the value and agree to use it as a means of payment, trusting in compliance with the rules indicated by the administrator or creator.
Although many consider investments in crypto assets risky, it is interesting how their followers have grown.
In addition, the Exchanges have made millionaires their creators and many users who began to invest from nothing and today see the fruits of having made a decision that could send them to bankruptcy if they did not support correctly.