A few days ago, Elon Musk expressed his interest in Bitcoin Investment. But now his preference has shifted to real-life investing.  *As per news, Tesla recently announced that it has invested billion 1.5 billion in cryptocurrencies. This news was also confirmed by the United States Securities and Exchange Commission (SEC). Elon Musk also recently appeared on his Twitter profile using #Bitcoin, a tweet that boosted the value of Bitcoin. He also said that in the future his company will soon start accepting Bitcoins for its products. But they will be limited and subject to the law. Elon Musk is investing in Bitcoin through his company. This may be due to his future plans to trade his products by accepting Bitcoin.

But the trend of buying/investing in cryptocurrency is again back due to recent major events like Elon Musk. People are curious about this new investment option as it seems quite unique and attractive, even though high risk is involved.

It is important to understand what cryptocurrency is- It is basically a digital form of currency, not paper cash. This virtual currency uses cryptography for security reasons, and this unique security tactic makes it difficult to misuse the currency. There are many benefits to investing in cryptocurrency, but you need to pay close attention to specific risks before you make your decision. What are these risks or factors which one should understand before going for any cryptocurrency or bitcoin investing; let’s understand:

Prices change

The change in price is the most important thing. Even older and larger cryptocurrencies are not immune. The reason for the price swing is that there are no much rules or restrictions, news which creates panic among cryptocurrency investors, etc.

Security measures

As there are no rules or restrictions, cryptocurrency could be a easy target for hackers. So extra precautions need to be taken to keep hackers at bay. You need to find a reliable cryptocurrency wallet that will be open for exchange, storage and trading. Web-based wallets are known to be less reliable.

Trend-dependent performance

The value of cryptocurrency fluctuates in trends and people’s predictions / beliefs.  Therefore, if investors want to invest in cryptocurrency, they should be part of this game.

Bubble

Investors view cryptocurrency as a bubble that could pop up at any time. The idea of ​​cryptocurrency is attractive, but it is weakened by not being centralized. There are many supporters to the cryptocurrencies but all these supporters are mostly big investors or companies which are taking using this currency to gain or to earn profit by selling their products. Small investors are investing majorly in hope of gaining good profit, trend  and most of them hardly understand the working or process of these cryptocurrency. There are opportunities in cryptocurrency for sure, but one needs to be careful about hackers, market and price estimates before they participate.

Before investing in cryptocurrency, make sure you can withstand high volatility, sudden and unexpected fluctuations. Also, make sure you don’t invest more than 5-10% of your total investment. Remember, invest as much money as you can afford to lose.

• Source: News on Social Media, Internet and CNBC  

Above article is updated version of Fund-Matters old article:- Read the old article.