Cryptocurrency has been the talk of the town for the last few years. But the majority of people still look at the topic with caution and have a somewhat tentative understanding of what they are.

They may be interesting to learn about, in the same way, that you listen to news from a faraway country. However, most people aren’t thinking about trying to invest or trade in cryptocurrency.

Meanwhile, recent history shows that it often can be a very good idea. Of course, cryptocurrency is risky – just like any other investment with a potentially high return. However, there are clear benefits, which we will cover in this article and we will see whether it is a good idea to invest in it.

• Is Investing in Cryptocurrency a Good Idea?
• What are the Risks of Investing in Cryptocurrency?
• Can you lose Money from Bitcoin?
• Can you Become a Millionaire with Cryptocurrency?
• Which Cryptocurrencies will Survive?

Is Investing in Cryptocurrency a Good Idea?

We will look at some points that shows that investing in cryptocurrency is a good idea at this point.

Incredible returns

Let us get the most notable thing out of the way first – cryptocurrencies have been around for a relatively short time, but so far they can be more profitable than most other investments. For example, the highest return you can expect from US stocks is about 20%, which is considered a very solid result.

Read Also: Cryptocurrency: Are we really ready to demonetize the world?

Cryptocurrencies tend to show wide changes in their prices over relatively short periods. It is risky – but high profits are never sure, and such potential is hard to find in other assets. Many people lose money in crypto trading because they try to do it without any specific strategy.

Independent alternative

With major wealth investors predicting a stock market crash, cryptocurrency may be a safer alternative to more traditional investment solutions. Opposing theories exist on how cryptocurrencies would behave in the event of a crash – after all, they emerged after the 2008 crash (and as a reaction to it). Some experts believe they will thrive, while pessimists predict that they will be negatively affected, just like everything else.

Your money is yours alone

Cryptocurrencies offer you a level of independence impossible with other means. When you keep your money in a bank, you are at the mercy of other people and organizations. At any moment, your access to the money that is rightfully yours can be limited or closed by the bank outside of governmental structures. The bank can be robbed or go bankrupt.

With cryptocurrencies, your money is yours only and stays yours forever. You do not rely on financial institutions for holding or transferring it. You do not have to pay their exorbitant fees. In the long run, it can become the basis of a truly open and decentralized economy. By investing now, you can be at the forefront of it all.

High liquidity

One of the primary characteristics of any asset is its liquidity – that is, how easy it is to purchase or sell it at a price close to the market rate.

By their very nature, cryptocurrencies have very high liquidity – you can quickly and easily buy and sell them, and the technological organization of trading platforms allows the use of a wide variety of tools and tactics, such as limit-orders (automated buying and selling at a specified price) and algorithm-based trading.

Simplicity

Getting into any kind of investment, be it stocks, bonds, or something else entirely, is traditionally complicated, bothersome, and time-consuming. Many investment opportunities (for example, real estate) have an extremely high entry threshold – you cannot just invest 100 bucks; you need a much more significant sum at your disposal to even get started.

Cryptocurrencies are a real sign of the times; both joining and taking part is simple. You do not have to deal with any institutions, sign papers, or visit banks. You simply create an account, get a wallet, and track all your assets with no effort at all.

Favorable forecasts

If you do not have previous experience, trying to profit through day-to-day trading in cryptocurrencies is likely to both lose your money and drive you mad. Price fluctuations happen daily, and they are often much more significant than what you may be used to with regular currencies.

A much better solution is to invest for the long-term – currently, most cryptocurrencies are going through a downward trend, but most forecasts are favorable and show growth within two to five years. And when we say “growth” in relation to cryptocurrencies, it is often explosive.

Just like any other potentially high-return investment, cryptocurrencies carry a particular risk – but it is more than offset by the degree of independence they offer.

What are the Risks of Investing in Cryptocurrency?

Successfully investing or trading bitcoin and other cryptocurrencies requires technical skill and at least a basic knowledge of how Blockchain works. Below we set out some of the most significant issues that investors should be aware of in this new and rapidly changing industry.

1. Loss or Destruction of the Private Key

Bitcoins (and this applies to other cryptocurrencies) are stored in a digital wallet and are controllable only by the possessor of both the public key and the private key relating to the digital wallet in which the bitcoins are held, both of which are unique.

If the private key is lost, destroyed or otherwise compromised, an investor may be unable to access the bitcoins held in the related digital wallet which will essentially be lost. If the private key is acquired by a third party, then this third party may be able to gain access to the bitcoins.

2. Other Cyber-Security Risks Including Malicious Activity

Trading platforms and third-party service providers may be vulnerable to hacking or other malicious activities. For example, in August 2016, nearly 120,000 units representing US$72 million worth of bitcoins were stolen from the Bitfinex exchange in Hong Kong, which led to an immediate 23% drop in pricing.

One year earlier, in September 2015, BitPay lost approximately $1.8 million of bitcoins due to a phishing attack . Also, if one or more malicious actor(s) obtains control of sufficient consensus nodes on the Bitcoin Network or other means of alteration, then a Blockchain may be altered.

While the Bitcoin network is decentralized, there is increasing evidence of concentration by creating “mining pools” and other techniques, which may increase the risk that one or several actors could control the Bitcoin Network or other similar Blockchain.

3. Risks Associated with Peer-to-Peer Transactions

Digital currencies can be traded on numerous online platforms, through third-party service providers and as peer-to-peer transactions between parties. Many marketplaces simply bring together counterparties without providing any clearing or intermediary services and without being regulated. In such a case, all risks (such as double-selling) remain between the parties directly involved in the transaction.

4. Other Risks Related to Trading Platforms and Exchanges

Digital currency trading platforms, largely unregulated and providing only limited transparency with respect to their operations, have come under increasing scrutiny due to cases of fraud, business failure or security breaches, where investors could not be compensated for losses suffered.

Although one does not need a trading platform or an exchange to trade bitcoins or other cryptocurrencies, such platforms are often used to convert fiat currency into cryptocurrency, or to trade one cryptocurrency for another.

5. Loss of Confidence in Digital Currencies

Digital currencies are part of a new and rapidly evolving “digital assets industry”, which itself is subject to a high degree of uncertainty. For a relatively small use of digital currencies in the retail and commercial marketplace, online platforms have generated a large trading activity by speculators seeking to profit from the short-term or long-term holding of digital currencies.

Most cryptocurrencies are not backed by a central bank, a national or international organization, or assets or other credit, and their value is strictly determined by the value that market participants place on them through their transactions, which means that loss of confidence may bring about a collapse of trading activities and an abrupt drop in value.

6. Regulations Preventing or Restricting Trading of Digital Currencies

There are significant inconsistencies among various regulators with respect to the legal status of digital currencies. Regulators are also concerned that bitcoin and other cryptocurrencies may be used by criminals and terrorist organizations. In the future, certain countries may restrict the right to acquire, own, hold, sell or use digital currencies.

7. Currency-Conversion Risks

Policies or interruptions in the deposit or withdrawal of fiat currency into or out of the trading platforms may impact the ability of certain investors to convert.

For example, when two of the largest trading platforms in China stopped margin lending and withdrawals in February 2017 and started implementing stricter anti-money laundering policies following discussions with Chinese authorities, this immediately triggered a decrease in pricing and trading volume .

8. Taxation of Digital Currencies

For investors in cryptocurrencies, it should be noted that there is substantial uncertainty with respect to the tax treatment of an investment in digital currencies. Bitcoins and other cryptocurrencies may be considered assets in certain jurisdictions and currency in others.

Sales or value-added taxes may be imposed on purchases and sales of digital currencies. The investors, based on their home jurisdiction, may require specific tax advice on a regular basis to ensure the tax treatment of their investments in digital currencies.

9. Slow-Down of Network

For bitcoins, mining is the process by which bitcoins are created and transactions verified. Through downloading a specific software, the user’s computer becomes a “node” that validates blocks (i.e. details of some or all of the most recent transactions).

Miners that are successful in adding a block to the Blockchain are automatically awarded bitcoins (plus transaction fees for transactions recorded).

However, if the rewards for solving blocks and transaction fees are not sufficiently high, or if a high volume of transactions occurs at the same time, the Blockchain may experience a slow-down. A slow-down is also possible for other cryptocurrencies, if the number of transactions on the blockchain is very high.

10. Dilution Due to Competition or “Fork” in the Blockchain

Last but not least, cryptocurrencies are based in protocols which govern the peer-to-peer interactions between various users. Dissent between users as to protocols to be used may result in a “fork”, opening two separate networks.

For example, in 2016, Ethereum experienced a permanent fork in its Blockchain that resulted in two versions of its digital currency, Ethereum (ETH) and Ethereum Classic (ETC), which trade very differently. Very recently, Bitcoin also experienced its first fork, leading to the creation of Bitcoin Cash (BCC), a new cryptocurrency.

Can you lose Money from Bitcoin?

With so many people rushing to invest, it’s important to be aware of the concerns surrounding this new market. Here are the top 10 risks of bitcoin investing and how to avoid getting caught up in them.

1. Young Technology

Cryptocurrency is still a very young technology. Bitcoin came about roughly 10 years ago, and it has yet to develop into something solid. With so many changes occurring in the past few years, there’s no telling how the market will evolve.

Bitcoin as we know it may become useless in the future. The best way to approach this new investment opportunity is with caution and due diligence. Take the steps to secure your funds, and brace yourself for the future of the market.

2. Currency Or Investment Opportunity?

Cryptocurrency could be an effective online currency exchange; however, buyers buy up bitcoins with the intent of investing much as they would with stocks. Some even think that bitcoin is a solid investment opportunity for retirement.

With a constantly shifting market, no regulation and zero physical collateral, investors can end up losing everything they invest. While bitcoin could potentially pay off, the best way to approach this investment is with caution. Small investments and small steps will cover more ground.

3. Financial Loss

Bitcoin has been referred to as a Ponzi scheme, with people at the top benefiting off the ignorance of others. As more people buy into bitcoin, it creates a bubble economy.

When the bubble bursts, bitcoin will essentially become useless; there will be many people holding onto cryptocurrency, intending to sell but unable to unload. There is no return on the investment, which can equal a very painful financial loss

4. Limited Use

Bitcoin may be a step toward a new monetary exchange; however, there are few companies that accept it as a viable form of currency. Currently, a few online stores, including Overstock, Newegg and Monoprix, allow cryptocurrency exchanges.

Additionally, bitcoin owners can use their funds for travel with companies like AirBaltic, Air Lituanica and CheapAir.com. Unfortunately, many companies do not recognize bitcoin as a legitimate exchange.

5. Block Withholding

New bitcoins are created by solving mathematical equations called “blocks,” which are created every time there is a bitcoin exchange online. A mining pool can use computational power to mine a block and hide it from honest miners instead of reporting the new block to the network. Essentially, this is a way for a select few to reap the benefits, while others are left with nothing.

6. Technology Reliance

Bitcoin is an online exchange that is reliant on technology. Coins are digitally mined, exchanged via smart wallet and kept in check using various systems. Without that technology, cryptocurrency is worth nothing. Unlike other forms of currency or investment, there is no physical collateral to back it up.

With gold, real estate, bonds or mutual funds, you own something that can be exchanged. With a currency that is 100% technology-based, bitcoin owners are more vulnerable to cyber threats, online fraud and a system that can be shut down.

7. Little Or No Regulation

Currently, the bitcoin market is operating without any major regulations. The government doesn’t have a clear stance on cryptocurrency; the market is just too new. It is not taxed, which can make it enticing as an investment opportunity.

However, a lack of taxation could lead to problems should bitcoin pose as competition for government currency. As of now, cryptocurrency is not a widely accepted currency, but the future is ever-changing. There’s no telling what the state of the bitcoin market could be in a few years’ time.

8. Fraud

In addition to hacking, there is a fair amount of fraud in the bitcoin market. Buyers and sellers are looking to trade bitcoins online, but since their rise in popularity, some of these exchanges can be fake.

The Consumer Finance Protection Bureau and the Securities and Exchange Commission have warned against these transactions where unsuspecting investors are duped out of their bitcoins in fraudulent exchanges. This lack of security creates a big risk for investors. While systems have been created to deal with these problems, security remains a big issue.

9. Cybertheft

Cryptocurrency is technology-based, which leaves this investment open to cyberattacks. Hacking is a serious risk, since there is no way to retrieve your lost or stolen bitcoins. Many reports suggest that many buyers lose their investments on exchanges and mining losses.

Exchanges are more likely to hacked — even if you have the protection of a smart wallet. Additionally, if you do have a wallet and you forget or misplace your key, there is rarely a way to retrieve your coins. Carefully research your cryptocurrency wallets to be sure you have the most reliable option.

10. The Volatile And Fluctuating Market

The price of bitcoin is constantly changing. As of November 6, 2018, one bitcoin was worth $6,461.01. If you happened to purchase a bitcoin on December 17, 2017, the price topped $20,000. Days later, on the 24th, buyers could not sell their investment for more than $14,626.

The bitcoin market is constantly rippling back and forth. With such an unpredictable market, there’s no telling if you will get a return on your investment. To avoid a massive loss, keep a vigilant eye on the market. Make small investments; they’ll be more beneficial long-term.

Can you Become a Millionaire with Cryptocurrency?

You have two options: mine or trade. By mining for Bitcoins, as long as the markets remain active you can basically make money for nothing. But the problem is, mining is such a tough gig now that it is hardly worth it.

Turning your computer into a miner will likely make it noisy and heat up. It would likely take you a long time to even mine a single Bitcoin, by which time you probably would have spent more on electricity. However, if you have access to some serious computing power and you don’t have to pay the bills, you could make some easy money here.

The more realistic way of making a million with Bitcoins is going to be trading them through the most prominent exchanges, such as Coinbase. Back in 2011, you could have bought Bitcoins for $10. Selling them at $1,000 today would have delivered a profit of $990 per Bitcoin.

Basically, you should have bought about 1,000 Bitcoins back when they were cheap. This would have cost you around $10,000 in 2011, making you a millionaire today.

Making a million with Bitcoins today is probably still possible, but you will need some capital. Bitcoins can fluctuate many percentage points every day (on May 22, 2017 the price jumped up 10%). Day trading Bitcoins is going to be risky, but where is there is volatility there is opportunity.

Otherwise, you need to take a longer-term approach and conclude whether or not you think Bitcoin will be successful. If you think Bitcoin is going to be traded by foreign exchange dealers, market makers and institutions one day, you might want to go long. 

Buying right now would be incredibly risky; the price chart is screaming “bubble”, but your point of entry is up to you. Don’t expect to see more of the same fast growth now though.

On the other hand, if you have a strong conviction in the downfall of the Bitcoin, you need to short the cryptocurrency in any way you can.

This would be an extremely risky endeavor still, but if the Bitcoin market is truly destined for failure, why not get rich when the bubble pops? To short Bitcoin, you will either need to get creative or join an exchange that allows you to do so.

Which Cryptocurrencies will Survive?

According to CoinMarketCap there are currently over 5500 cryptocurrencies in existence. It is doubtful whether most of these will survive even just the next few years and many are in fact already “dead”.

In other words, a large percentage of existing cryptocurrencies have flatlined in price and their development teams have likewise moved on to greener pastures.

Many cryptocurrencies that exist today emerged in 2017-2018 when the world watched the epic Bitcoin bull run which brought an army of largely uninformed retail investors. As we know now, many of these projects fell short of their development goals or perhaps never delivered anything at all! Given so much choice, how can you figure out which cryptocurrencies will stand the test of time?

we’ve put together a list of 10 cryptocurrencies which we believe will still be around in 10 years. Our criteria for evaluating this is devilishly simple: use-case.

While cryptocurrency traders can often get lost in the data, it is a sobering thought to consider whether the asset you are investing in has any actual value to society outside of your TradingView terminal.

A focused vision combined with practical application is what will stand the test of time, and what may in fact become the most valuable asset once cryptocurrency really starts to go mainstream.

1. Bitcoin (BTC)

Surprise! Bitcoin takes the number one spot for one simple reason: its reputation. Bitcoin is used synonymously with cryptocurrency whenever crypto is discussed by most mainstream sources. Being the “original” cryptocurrency, it has already existed for 12 years and has not only a dedicated investor base but also an immense development community.

While there are some concerns regarding what might happen to Bitcoin mining when quantum computers become available to the average joe, the fact of the matter is that the development community can and will find a way to mitigate against any issues quantum mining may bring.

With the last Bitcoin set to be mined in 2140, it doesn’t look like it will be going away anytime soon! What happens after that? That’s anyone’s guess.

2. Ethereum (ETH) 

We swear this list isn’t copied from CoinMarketCap’s top 10 coins by market cap. Ethereum comes in second because of it’s almost unlimited potential. Similarly to Bitcoin, Ethereum has an impressive development team, with over 200 000 developers working on the project worldwide.

In fact, Ethereum has twice as many active developers as Bitcoin. This should come as no surprise considering it is positioning itself to become the “world computer”. The fact that decentralized applications of all kinds can be built on its framework makes it a sort of development sandbox with almost limitless capability.

Not only that but hundreds if not thousands of other cryptocurrencies are built from Ethereum as ERC-20 tokens. Even if Bitcoin were to die, it seems impossible that Ethereum would go down with it. These reasons are also why some consider Ethereum to be the ultimate cryptocurrency in terms of its longevity.

3. Basic Attention Token (BAT) 

For those unfamiliar, BAT is the cryptocurrency used to reward user attention on the Brave browser whenever they view ads. The Brave browser is completely private by default – it blocks all ads, trackers, and any sort of data which websites use to track you.

It has built in compatibility with Tor, the browser used to access unlisted websites on the dark web and has also partnered with DuckDuckGo as their search engine. Users can opt in to view ads in exchange for Basic Attention Tokens.

Perhaps the most important feature of Brave is that it saves users data and battery power by blocking all of the ads and trackers which usually run in the background. Brave has seen a massive spike in adoption in the last year and shows no signs of slowing down.

Even Joe Rogan is using Brave! Considering almost everyone on planet Earth uses the internet, Brave has the potential to become the world’s most used browser. As far as use-case goes, you can’t really beat that!  

4. Theta (THETA) 

Theta made the news recently when Google announced they had partnered with the project shortly after Samsung announced they would incorporate the Theta network by default into the next wave of smartphones which will be sold in North America.

So, what does Theta do? Put simply, Theta allows for decentralized streaming that is fast and secure. It does this by pooling unused bandwidth from other users and rewards them in Theta tokens. In theory, it is possible that Theta will become the Netflix of the future, allowing not only for insanely high-quality streams of movies but also TV and E-sports.

Fun fact: one of the co-founders of YouTube is part of their advisory board. With qualities like these, Theta may just become one of the biggest cryptocurrencies in the coming years.

5. Siacoin (SIA) 

Siacoin is the current leader in the realm of decentralized data storage. It should be noted that there is no guarantee it will remain ahead of the pack in the years to come, but rest assured that some cryptocurrency-related to data storage will still exist in 2030.

Cloud storage is extremely popular and currently dominated by centralized giants like OneDrive, Dropbox, and Google Cloud Storage. It’s definitely not nice knowing that these companies have no scruples when it comes to peeking at user data.

Despite their attempts to market themselves as secure and private, the only thing that is truly privately protected is what the hell they do with our data! Siacoin makes it possible to store your files in a secure, private, and decentralized manner for a very low fee.

You basically rent hard drive space from users who are compensated in Siacoin. The cost of doing this is extremely cheap and much more affordable than legacy alternatives.

6. Orchid Protocol (OXT) 

Orchid Protocol made the headlines when it was suddenly listed on Coinbase, one of the best-known cryptocurrency exchanges in the world. Like the last few cryptocurrencies, Orchid provides a very relevant service: it is a decentralized virtual private network (VPN).

Existing VPN services are overwhelmingly centralized and most have questionable security, having experienced many data breaches in recent years. Worst of all, some such as HideMyAss have worked directly with law enforcement. Orchid provides an alternative that is not only decentralized, but also more secure and cost effective.

Although Orchid is currently only available for mobile phones, desktop integration is expected to come sometime this year. Once the word gets out and assuming they can make their front-end extremely user friendly, Orchid stands a solid chance at making it to 2030 at the very least.

7. Monero (XMR)

As it so happens, Monero may be one of the only cryptocurrencies that is true to the ethos of the space. As a privacy coin, it is perhaps the most discreet option currently in existence for transferring value besides using physical cash.

Consequently, it has come under fire from regulators around the world due to its widespread use by criminals. It has even been delisted from some exchanges as a result. As governments become more and more involved in our daily lives, it is questionable whether cryptocurrencies will remain outside of their watchful eyes for long, especially if the space wishes to see serious adoption.

However, it seems that Monero will never play by their rules and that gives it a value which will last so long as people have a reason to fear being watched by a third party.

It is not farfetched to assume that this fear, whether due to criminal behavior or genuine persecution, is something that will exist on this Earth well beyond 2030. In the absence of any real alternatives, Monero will still be alive and well for the foreseeable future.

8. Binance Coin (BNB) 

Before you close this window and mutter “ugh! Another Binance shill!” we assure you that we are not at all affiliated with Binance (though we do wish we were). Binance is perhaps the single biggest name in cryptocurrency aside from actual cryptocurrencies.

While it is possible that Binance as a centralized exchange may not exist in 10 years, some sort of ecosystem involving its native token is almost guaranteed to exist in some context. This could be a widely used decentralized exchange (DEX), lending platform, or even a revolutionary new application.

For better or for worse, Binance is insanely influential in cryptocurrency. Heck, they own CoinMarketCap! On the bright side, their CEO Changpeng Zhao seems to be true to the cause of cryptocurrency.

He seems dead set on doing everything in his power to keep the space alive and will certainly put at least as much enthusiasm into making sure Binance exists in some form well past 2030. So long as Binance exists, it is hard to see how BNB will disappear.

9. PAX Gold (PAXG) 

Tokenization is one of the most valuable functions of cryptocurrency. Of all the tokenized assets you would want to have as part of your portfolio, some sort of tokenized gold would be somewhere at the top of that list. Paxos is one of the few cryptocurrency companies with a good reputation that is also regulated.

You can buy tokenized gold through them in the form of PAXG which can be redeemed directly from them for physical gold (if you have enough of it) or converted into fiat and wired to your bank. What’s amazing is that you can actually search up your token and see which gold bar it is a part of. All the gold is stored in a Brinks vault in London, England.

Read Also: Top 10 Best Cryptocurrency to Invest in 2021

The advantage of this is that you have the liquidity of a gold exchange-traded fund (ETF) while also having a claim to the underlying asset you are trading. Needless to say, some sort of tokenized precious metal will be around after 2030 and PAX Gold is the frontrunner by a long shot.

10. USDC (USDC) 

We know what you’re thinking “wait, a stablecoin? Are you serious?”. Yes, we are serious! While it is almost inevitable that fiat currencies such as the US dollar will eventually yield to cryptocurrencies, it is extremely unlikely that this will happen any time before 2030.

As such, until that fateful day comes, stablecoins will be around. USDC has gradually been moving up the ranks on CoinMarketCap and with good reason. It is one of the best regulated and audited stablecoins in existence and is owned by Circle, the same company which owns Coinbase.

While this asset is certainly not as exciting at the others, given that it will on average lose 2-3% of its value each year due to inflation in tandem with the fiat currency it is pegged to, it is nonetheless guaranteed to last until fiat currencies go extinct. 

Conclusion

Like most of the investment opportunities available in the market, cryptocurrency has it own level of risk attach to it. But is it worth it? At the moment it should give you results if properly done. SO, it is best to acquire some knowledge about it before making any investment decisions