Cryptocurrency Investment: Gamble Or Wisdom

By Yash Saraiya

Cryptocurrency is a recent addition to the basket of intangible assets. It's a virtual currency which doesn't have any physical embodiment and operates majorly through blockchain technology. Blockchain is a decentralized system of distributed ledgers, which records the information of users within the network of computers.

Some major currencies that function through blockchain are Bitcoin, Ethereum, Bitcoin Cash Ripple etc. Today, more than 8000 crypto coins are in existence and available for business. Many people want to go for crypto investment/trading, but the high risk and volatility drag their feet. So before stepping into the market, here are a few factors which are necessary to evaluate for a healthy trade.

1. Highly-Volatile Nature

Cryptocurrencies are always unsettled regarding their valuation, they can be one minute up and the next minute down. Let's see the case of Bitcoin, in the month of Jan (2021) it was trading at $30000, after the span of 3 months (April 2021), it reached its peak of $65000. But unexpectedly the following month it dipped down to $25000, below the aggregate of January. These Ups and Downs are frequent in the crypto market, such oscillations are a result of its decentralized structure.

Another force which is behind this volatility is the limited supply of some currencies. Bitcoin being the most eminent in the business, has a limitation of 21 million. It is popular and always in demand, but due to its limited presence, the law of demand/supply comes into the play. The crypto-market can anytime make your pocket empty, but it also has the potential to produce overnight success.

2. Threat to Cyber Security

Due to the absence of any regulation, the crypto world has become a crime haven and possesses great unsafety. Since 2016, cyber attacks like phishing, cryptojacking, and ransomware have increased by 200%. Crypto-jacking is the most seen offence here, traps are usually laid through malicious mails/links that infect the victim's device. Recently, some incidents happened where cyber-criminals brought the trading exchanges to their knees. Hackers either sell this data in the market or demand a hefty ransom from the duped. To shield your privacy from such malpractices, paid security tools could be the best option. You also have to be conscious about these traps by yourself.

3. Insecurity of Governments

Global administrators are raising concerns against cryptocurrency and other virtual assets. Most of the governments are preparing to regulate or impose full-scale ban on this domain. Countries like China, Russia, and Vietnam allegedly drafted laws to permanently curb this market. While the governments of India, USA, and Germany are still searching for the best possible way to modulate it.

Conclusion

These risk factors are sufficient to tell the contrary side of the crypto-world. But apart from it, this market has the true potential of producing multi-million assets and wealth. Now many will question whether the crypto investment is a gamble or wisdom. Well, it's a game of perception, if someone is putting arduously accumulated money then it becomes a risky bet. Wisdom is when you have strong financial backing, to bear the substantial losses during the investment. In both the circumstances, investors can be rewarded/punished, but the amount of risk undertaken makes the difference.