With the recent boom in cryptocurrency prices, more and more people are wondering if crypto investing is a safe bet. After all, what goes up must come down, right? And with digital currencies like Bitcoin, Ethereum, and Litecoin being relatively new to the scene, there’s definitely a sense of uncertainty surrounding them.
So, is crypto investing or gambling? And is it safe to gamble with crypto? Let’s take a look at the risks and rewards of investing in cryptocurrency.
Risks of Crypto Investing
Of course, with any investment there are risks involved. And with cryptocurrency, there are definitely some risks to be aware of. First and foremost, cryptocurrency is a highly volatile asset class. This means that prices can fluctuate wildly from day to day—and sometimes even from hour to hour. For example, in early 2018, the price of Bitcoin dropped by nearly 50% in just a matter of weeks. So if you’re not prepared for the ups and downs of the crypto market, you could easily lose a lot of money very quickly.
Another risk to be aware of is that many cryptocurrencies are not regulated by governments or financial institutions. This lack of regulation makes cryptocurrencies a prime target for fraud and scams. In fact, billions of dollars worth of Bitcoin have been stolen by hackers over the years. So if you’re going to invest in cryptocurrency, it’s important to do your homework and only invest in trusted coins with a good reputation.
Rewards of Crypto Investing
Of course, there are also potential rewards to be reaped from investing in cryptocurrency. Firstly, as we’ve mentioned, cryptocurrencies are incredibly volatile—which means there’s always the potential for huge gains in a short period of time. For example, at the beginning of 2017, the price of Bitcoin was around $1,000 per coin. By December 2017, it had soared to nearly $20,000 per coin—an increase of 2,000%! Of course, there’s also the potential for losses just as dramatic—but that’s true with any investment.
Another potential reward of investing in cryptocurrency is that many digital currencies are deflationary, which means that their supply is limited and they will become more scarce over time. This limited supply combined with increasing demand could lead to rapid price appreciation for certain coins—making them an excellent long-term investment opportunity
So, Is Crypto Investing or Gambling?
The answer to this question isn’t simple yes or no. There are definitely risks involved in investing in cryptocurrency—but there are also potential rewards. If you’re thinking about investing in digital currency, make sure you do your research and only invest what you can afford to lose.