2022 was a tumultuous year for crypto investors, with prices for some coins hitting all-time lows. However, the beginning of 2023 has brought a glimmer of hope, as Bitcoin’s (BTC) price has risen from C$22,473 on January 1st to C$29,103 on February 12th, per Google Finance.
This news has prompted many to explore the possibility of investing in cryptocurrency. But is this really a good idea? Today, I’ll review some of the pros and cons of investing in crypto so that you can make an informed decision.
AN OVERVIEW OF THE PROS AND CONS
First and foremost, it’s important to understand that sudden changes are the norm when it comes to crypto. The price of Bitcoin, for example, has seen massive (and often very random) shifts many times in the past.
Here’s a quick review of some of the pros and cons of investing in cryptocurrency.
Pros
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Possibility of high returns: Cryptocurrencies can increase in value dramatically over short periods of time. However, this can be highly unpredictable. -
Decentralization: Most cryptocurrencies operate independently of central banks, providing investors with more freedom. -
Accessibility: Thanks to its decentralized nature, your cryptocurrency funds can be accessed anywhere in the world at any time and converted into most major fiat currencies.
Cons
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Volatility: Crypto pumps can be very profitable, but the crash on the back end can be just as devastating. Cryptocurrency’s value is incredibly volatile and can flip on a dime. -
Lack of regulation: Cryptocurrency regulations are still developing in Canada, leaving investors with limited protection. -
Exchanges may go under: Due to lack of regulation, investors who hold funds in an exchange may lose their investments if the exchange goes bankrupt. -
Security risks: Cryptocurrency exchanges and wallets can be vulnerable to hacking and theft, which can result in the loss of funds for investors. -
Complicated technology: Cryptocurrencies and blockchain networks can be complex and difficult to understand, making it challenging for many individuals to participate in the market.
WHAT ARE THE BENEFITS OF INVESTING IN CRYPTOCURRENCY?
Here’s a more in-depth look at the reasons why you may want to consider investing in cryptocurrency.
Massive potential for future growth
Cryptocurrency has massive potential for growth. Supporters of crypto investment claim that the current value of crypto is just the beginning. They believe that once cryptocurrency sees widespread adoption, the price of top-performing coins will skyrocket.
Unfortunately, there’s no way to determine when this will happen or if it ever will.
Access your funds from anywhere in the world
If you’re looking for maximum freedom for your money, cryptocurrency is one of the most accessible currencies in the world. Most cryptos are completely decentralized and can be sent to any wallet address anywhere in the world without paperwork from a traditional bank.
You can also access your wallet and convert crypto into local fiat currency wherever you find a Bitcoin ATM.
WHAT ARE THE RISKS OF INVESTING IN CRYPTOCURRENCY?
Now, here’s a more in-depth look at some of the more prominent risks associated with investing in crypto markets.
Cryptocurrency markets are incredibly volatile
Even the most stable cryptocurrencies have the potential for extreme price fluctuations over short periods of time. Although the internet often glorifies so-called “Bitcoin millionaires,” these represent a very small percentage of investors.
The reality is that there are far more investors who lose money investing in crypto, but you don’t hear about it as much in the media.
Cryptocurrency exchanges may go bankrupt
In June 2022, FTX acquired the Bitvo cryptocurrency exchange and moved into Canada. Just five months later, in November, Sam Bankman-Fried’s FTX empire collapsed. This event rocked the crypto world to the core, and many investors lost trust in the market.
Shortly thereafter, news of behind-the-scenes scandals and misuse of investor funds were revealed. In mid-December, the U.S. government charged Bankman-Fried with fraud.
If you lose your hardware wallet, you lose your crypto
Savvy crypto investors have long known that holding their crypto assets on an exchange isn’t very safe. Instead, they keep most of their cryptocurrency assets in
