According to Katie Brockman at The Motley Fool, cryptocurrency investing is both trendy and lucrative. However, it also comes with a certain amount of risk. While Bitcoin has been setting records (peaking around $63,000 in April), Dogecoin and Ether are becoming more popular. Venmo and PayPal both accept crypto payments. Brockman writes, “…five years ago, in April 2016, Bitcoin cost just over $400 for one coin. As of this writing, Bitcoin is worth more than $54,000 per coin.”
The Risks Associated with Cryptocurrency Investing
While Bitcoin and other cryptocurrency investing can be quite lucrative, doing so also comes with a certain amount of risk acceptance. Brockman rightly points out that the biggest risk with cryptocurrencies is the level of uncertainty associated with them. It’s unclear as to whether this form of currency will become mainstream or disappear as a passing trend. This is even more the case since few businesses in the United States accept cryptocurrency payments.
Another potential risk with cryptocurrency investing is how volatile an investment it is. There have been periods where the value of cryptocurrency has taken a deep fall. This makes investing in crypto a poor fit for those who are risk adverse.
The final risk Brockman points out involving investing in cryptocurrencies is the actual ownership of cryptocurrency. Brockman writes, “Buying cryptocurrency directly involves purchasing coins through a crypto exchange — not a traditional stock market exchange. You’ll also need a digital wallet to store your coins, which can be a security risk if you’re not careful.” The reasons this is risky is hackers can break into your wallet and if you lose your password, you won’t be able to access your investments.
Should You Make Investments in Cryptocurrency?
Cryptocurrency investing is for you if you have a high tolerance for taking risks – and you have the money to get started. You’ll want to be sure to take Brockman’s advice and ensure that your portfolio is diversified. Also be sure you’re researching your investments – while Bitcoin is the most popular, it may not be the cryptocurrency for you. You’ll definitely want to dig deeper to make sure that the digital currency you’re potentially investing in matches your values.
Where to Purchase Cryptocurrency
If you feel that cryptocurrency investing is right for you, here’s a list of places where you can purchase digital currency.
Robinhood: If you’ve been paying attention to investing news this year, you’ve likely heard of Robinhood. Robinhood is a commission-free place to purchase digital currencies. Users can trade Bitcoin, Dogecoin, Ethereum, and more on this platform.
eToro: For those just getting started, they may want to look at eToro as an option. There are 17 different cryptocurrencies available for purchase on this platform including Bitcoin, Neo, Ethereum, Dash, Cardano, EOS, and more. There’s also a practice portfolio to help beginners understand what they’re doing.
Coinbase: Coinbase offers a $5 Bitcoin incentive just for signing up with them. This platform allows you to manage your portfolio, schedule buys daily, weekly, or monthly, and stay on top of everything using a mobile app. They also boast insurance protection and secure storage.