14 / 04 / 2021

Is it worthwhile to invest in cryptocurrencies?

For some of us, this is a mysterious world and truly unknown subject. However, those who are looking for ways to make non-standard investments may have heard about cryptocurrencies. There are already a lot of them in the internet world. The best-known cryptocurrency is bitcoin, which was first created and encouraged investors with quite strong leaps of value. Those who invested in bitcoin at the right time have been able to achieve high rates of return, which encouraged more and more daredevils to advertise the subject of cryptocurrencies. What are they really, and is it worth investing in them?

What is a cryptocurrency?

The full name cryptocurrency is a cryptographic currency, in other words a virtual currency. Its owner has it on his/her computer, or in an application on their smartphone, and all transactions take place in an electronic manner. All units of a given crypto currency have their own unique codes, which protect them from copying or multiple use.  In the case of cryptocurrencies, there is no institution supervising their market and the transactions within it.

Nothing regulates their supply and nothing affects the price. Cryptocurrencies are only subject to market mechanisms, and their quotations are shaped by them. The only mechanism that influences and shapes their image and value are the daily market situations. In a word, the cryptocurrency is not under any supervision.

 

Is it worth investing in cryptocurrency?

Investors can be encouraged to invest in cryptocurrency by their extremely high prices. On the other hand, there are many sceptics of this way of investing. The example of bitcoin shows that the growth of its quotations has already slowed down considerably. As a rule, market mechanisms are designed in such a way that prices cannot rise indefinitely, and this state of affairs is already taking a long time.

Therefore, sceptics are warning against a growing speculative bubble, which is becoming more and more pronounced. People encouraged by increases in prices and the high rates of return achieved by others also decide to invest, which contributes to even further growth. However, there is a risk that, in the end, the interest will run out or will decrease significantly, and then the charts will go down.

Moreover, those who bought the cryptocurrency some time ago may finally want to make profits and sell them out, which can also lead to decreases. If this were to happen on a bigger scale, this speculative bubble would burst, and the declines could be very sudden and, consequently, cause very severe losses for investors.

It is not easy to answer the question of whether it is worth investing in any assets, as is the case with cryptocurrency. Everyone has to answer this question for themselves. It is certainly possible to make money from this, but it is necessary to feel when to withdraw if necessary.

 

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