Why Cryptocurrency Might Not Be For You
In my previous post, I discussed the ways in which Cryptocurrencies are powerful, but I think it’s also prudent to discuss ways in which to avoid scams. Because despite the power behind them, cryptocurrencies are not perfect, and are not for everyone.
So let’s talk about the other side of the (Bit)coin — and as always, I encourage you to do your own research and constantly search for a deeper understanding of your investments.
What to Know When Investing in Cryptocurrencies:
1. There’s a Learning Curve
When you’re getting into the cryptocurrency game, there is a massive learning curve. It’s very different from the currency we use on a daily basis, and you can’t jump in expecting it to be the same. It’s not as simple as opening up a brokerage account, wiring in the money, and buying a share of a company.
Instead, you have to learn a new terrain. You open accounts on exchanges, purchase the coins on exchanges, and then transfer those coins to a wallet — which could be on your computer, your smartphone, or even your Cloud storage. You must also remember to document your keys, which give you access. I’ve heard many stories of people losing coins because they forgot their keys.
2. A Lack of Valuation Information
Right now, there isn’t a lot of information on how to value certain cryptocurrencies. In a normal purchase of shares, you have a prospectus and shareholder reports and so forth. Yet with many coins, there’s less information and understanding of how well a certain currency will do. Bitcoin is more well known, but there are plenty of new and upcoming cryptocurrencies that are still lacking appropriate data.
3. Low Regulation
One of cryptocurrencies biggest criticisms is a lack of regulations. It’s like the Wild Wild West right now — even though it’s better than it was. Many people think twice about investing for this reason alone, as it’s given way to a number of scams. And even though Bitcoin itself is un-hackable, people have hacked exchanges where coins were present, and stolen them that way.
There are other types of fraud that exist within the cryptocurrency space, as well. Bitcoin, for example, has resulted in a lot of quick and easy money for investors. Yet when that happens, you have undesirable characters enter the space — there are always people who want to outsmart the system. And even as they get phased out, new ones come in. By staying consistently informed, you can avoid much of the trouble.
4. It’s Internet Dependent
Another common criticism is that without internet connection, you can’t partake in the system. And as a global currency, there are many who are without a consistent internet connection. You wouldn’t be able to do much, or even transfer coins, without regular access to the internet.
5. Small Network
I also regularly hear that the network for Bitcoin and other currencies is very small, and many places don’t accept it yet. Though I do see that more and more institutions are accepting Bitcoin, especially in the alternative asset space. I believe this will only continue to speed up, but ultimately it is early in the game. You can’t go to your local convenience store and buy a soda with Bitcoin.
As you continue your Cryptocurrency journey, my hope is that you stay as informed as possible. A general investing philosophy is never to put your money in something you don’t understand, right? Even though the benefits are important, it’s just as important (if not more so) to know the risks. Use the points above as a jumping-off point for your own research, and form your own opinions. You’ll know whether this is an ideal investment for you.
Live your Freedom, Live Your Legacy, On Your Own Terms,
M.C. Laubscher is a husband, dad, podcaster & Cashflow Specialist. He helps business owners and investors create, recover, warehouse & multiply cashflow. You can learn more about exclusive cash flow strategies in M.C.’s new video series at https://www.yourownbankingsystem.com/