Is Cryptocurrency a Good Investment? The Pros and Cons of Getting into Crypto

Many people who have just begun learning about cryptocurrency tend to view it in terms of extremes. There are those who believe that crypto has “magic bullet” qualities that make it innately superior to other currencies. In contrast, there are those who believe that crypto is nothing more than a tech fad that has little chance of overtaking either traditional fiat currency or other types of investments.

But anyone who intends to become a serious investor in cryptocurrency must have a balanced and well-informed view of its nature as an investment vehicle. Just like other assets in the different investment classes, crypto has its own set of advantages and disadvantages. In addition, a crypto investment may be more suitable for one type of investor as opposed to another.

Where do your investment interests come in, and how can you decide whether to pursue cryptocurrency or not? To help you answer those questions, here’s a brief comparison of the pros and cons of investing in crypto. Hopefully, this will guide your decision to explore a cryptocurrency coin like Monero (XMR) and purchase additional products for your crypto trading journey, like a dedicated Monero wallet.

Investing in Cryptocurrency: The Pros

First, let’s examine the advantages that are usually ascribed to cryptocurrency—plus some advantages you may not know about yet as a beginner to crypto.

You’ll Get a Taste of the Most Innovative Financial Technologies

Though crypto shouldn’t be regarded as the “be-all, end-all” of modern finance, it’s plain to see that cryptocurrency blockchains boast some of the most innovative financial technologies of our time. It’s exciting to think about the investment opportunities that lie with crypto, especially in a world that may soon adopt a decentralized finance or “de-fi” approach. As history has proven with other technological innovations, the earliest adopters stand to gain the highest rewards. Investing in crypto now could put you in a powerful financial position in a more decentralized future. 

You’ll Experience Greater Variety than Before

Another key advantage of investing in crypto now is that you’ll have a wealth of options that can satisfy your investment interests. No longer are you confined to the likes of the most famous crypto coins, like Bitcoin (BTC) and Ethereum (ETH). There’s also the option to pursue a privacy token like Monero, whose core technologies—such as its ring signature cryptography method and stealth address generation—afford more security and anonymity than more popular coins. If you want to be more private and low-key about your crypto investments, a coin like Monero will suit your needs.

You Can Diversify Your Investment Portfolio and Confront Risk in a Forward-Thinking New Way

If you’re investing in other asset classes, crypto coins may be a good future fallback. The existence of crypto in your investment portfolio can diversify the risk that you experience with your other assets, as well as with traditional fiat currencies. Several investors have made it a point to explore crypto as a potential hedge against inflation since its value is not regulated by central banks or governments. If crypto becomes more mainstream, it may be a viable option for you to rely on when your cash and other investments dip in value.

The Ecosystem Around Crypto Has Become Broader and More Inclusive

Crypto is currently far from being the default currency to transact with, but the fact remains that its ecosystem has become wider and more inclusive over the years. It is no longer just a niche interest with a few tech enthusiasts behind it. Nowadays, there are more than 100 million crypto traders involved in the buying and selling of these virtual coins. More establishments are also accepting them as a form of payment for travel, rental services, luxury goods, artworks, and more. The ecosystem is set to grow even further in the next few years, which makes the prospect of investing in crypto even more appealing.

Taking a Chance on Cryptocurrency: The Cons

On the flip side, there are certain disadvantages to investing in cryptocurrency that you need to be aware of. The most important caveats to cryptocurrency investments are the following:

The Current Market Trends Surrounding Cryptocurrency Are Volatile

There’s no denying that cryptocurrency is a highly speculative asset, and its value can change greatly even within short periods of time. It’s not easy for traders to predict when the crypto market will become “bullish” (on the receiving end of a prolonged upswing in value) or “bearish” (susceptible to a crash in value). Would-be investors need to acknowledge that volatility before they go any further with crypto.

Competition within the Crypto Market Has Become Fiercer

It’s also worth noting that the crypto market is fiercely competitive, both among crypto brands and among traders themselves. A crypto investor will need to think carefully about which coin they choose to invest in, knowing that it might fall behind other coin brands and perhaps even fail in the future. If a crypto investor wants to pursue adjacent activities like crypto mining, there’s also no guarantee that such activities will bring back the desired returns. It’s a cutthroat race to secure new blocks along the blockchain, which may be tiring and even discouraging for traders.

Cryptocurrency Exchanges Are Vulnerable to Cyber-Attacks and Financial Crime

Lastly, it must be acknowledged that some cryptocurrency exchanges are susceptible to phishing, hacking, security breaches, money laundering, and other forms of financial crime. If the security features of a certain coin are lacking, and if investors don’t know how to protect themselves against malicious agents, this could result in steep losses that are hard to recover from. 

Final Words: Is Crypto the Best Investment Vehicle for You?

Ultimately, there’s no right or wrong answer for whether it’s a good decision to invest in crypto. Your success as a crypto investor will depend on myriad factors such as your choice of token, your trading strategy, and the goals you want to accomplish over a certain investment horizon. Just remember to consider both the pros and the cons as carefully as you can, and make the decision that best reflects what you want out of your overall financial journey.

Adam Hansen

Adam is a part time journalist, entrepreneur, investor and father.