The following article highlights the things that need to be kept in mind before you decide on investing in cryptocurrency.

What is Cryptocurrency?

Before getting on the root of the topic, it is essential to understand what cryptocurrency is. It is basically a digitalized form of currency, not paper cash. As the name suggests, this virtual currency uses cryptography for security reasons and is difficult to breach and exploit due to this unique security tactic. The most attractive aspect apart from the ease of handling is its organic nature. This means that the government has no play in its ownership. Not being issued by central authorities renders it safe from government or outside manipulation and meddling.

One of the first cryptocurrencies was Bitcoin, that is still being used today. It is by far the most popular and most used. Though, there are many others in the market to choose from. Forks also exist, these cryptocurrencies branch off from the ones that already exist.

The cryptocurrencies are predicted to be the online payment giants. Presently, thousands of cryptocurrencies exist with a market value of $ 200 billion, with Bitcoin taking more than 50% share of the total value.

Investing in Cryptocurrency

There are many benefits of investing in Cryptocurrency, but certain risks need your complete attention before you finalize your decision.

• Variability in Price

These price swings are the most important and common feature. Even the older and bigger Cryptocurrencies are not immune to it. The reason being the price swing is, it not being centralized. It has no regulation of any sort. Around 25% swings in the price of the total amount are not recognized. If regulations are imposed, the whole concept of cryptocurrency would be confronted.

• Security Measures

Cryptocurrencies not being regulated makes them an easy target of hackers. Hence extra precautions become necessary to keep hackers at bay. There have been major infringement issues where investors lost thousands of dollars. You would need to find a reliable cryptocurrency wallet which is open to exchange, storage and trade. Web-based wallets are known to be less trusted.

• Trend dependent performance

The worth of cryptocurrency fluctuates between trends and public belief. Hence, investors have to play a game of prediction before opting for a cryptocurrency.

• Bubble ready to burst

Investors consider cryptocurrency as a bubble, that can pop anytime. With prices augmenting at an alarming rate, investors deny this to carry on a long term. One way to safeguard your interests and prevent bigger losses is to diversify investments. If one prospect fails, at least you will have hope for the remaining prospects. You will not lose money on a big sale or go bankrupt in one night.

The idea of Cryptocurrency is attractive, but it being not centralized renders it a weak one. If it is made centralized, the whole concept of Cryptocurrency will be rendered worthless. There are numerous opportunities, but one needs to be alert and cautious of hackers and unpredictability of markets and prices before partaking it.