Is it still worth your dime to invest in crypto?
Cryptocurrency has always been volatile. With rampant fraud and scamming in crypto trading, much of the world cooled on cryptocurrencies and other blockchain-related commodities. With the failure of Meta companies and FTX’s recent bankruptcy (among other things), you can see why.
In 2022, NFTs went down by 60% from the second quarter to the third. After falling to the lowest it’s ever been in two years, Bitcoin began to recover in January 2023.
Some analysts suggest that this may be the best time to invest in crypto. But is it worth the risk or your time? The following guide will seek to answer this question and more.
The problem with cryptocurrency
The biggest issue with cryptocurrency is its abstract quality. Much like fiat money, it has no intrinsic value since it isn’t backed by any precious metals. However, most fiat currencies can be represented by real-life physical tokens, which isn’t true for most cryptocurrencies.
Making crypto more like fiat currency would defeat crypto’s ultimate purpose and advantage. Yet, in many instances, its strong suit is also the reason it is unappealing to many investors. The market’s inherent volatility also turns off many potential investors who fear losing their investment without the possibility of the market recovering.
As such, trading crypto requires considerable effort. Some crypto-influencers have mused that to be a successful trader, you must make it your full-time job, not your hobby. Investing and trading in cryptocurrency are much like forex trading. Forex is nearly as volatile as cryptocurrency, although the forex market is regulated and sees more than $7.5 trillion traded daily, making it a much larger market than crypto as well.
The attack on crypto
In 2022, the American federal government began developing frameworks to regulate cryptocurrency. However, this may be a detriment more than it is a way to protect investors and traders. Some financial analysts suggest it could be in the US’s best interest to invest in cryptocurrency and all other blockchain technologies if it hopes to maintain its position as a geopolitical and economic leader.
Dubai has been cultivating a thriving crypto ecosystem, whereas the US Security and Exchange Commission (SEC) seems focused on attacking crypto. Over the last few months, it has challenged everything from stablecoins to securities and specific cryptocurrencies.
But how about recent scandals such as FTX? Isn’t crypto trading rife with fraud and scams? These questions and concerns are warranted, but it’s important to note that there are ways to trade securely.
Why cryptocurrency still matters
By all considerations, cryptocurrency should have died just like NFTs and the Metaverse, seeing as these are all blockchain-related properties. But the failure of the NFTs and the Metaverse should be seen as growing pains.
Crypto has continuing value because it’s the first well-known and widespread blockchain technology. And as long as blockchain exists, crypto will not die. In fact, crypto is and will continue to be the current and future currency of the Metaverse.
Technological advancement can seldom be compartmentalized. With Web 3.0 looming, technology and computer science are more interwoven than ever. Plus, there has been a recent boom in consumers’ use of AI and machine learning applications such as ChatGPT and Dall-E. AI uses and sorts massive amounts of data to produce results from queries.
The future of money
When AI and machine learning are paired with blockchain, the technology can make using AI tools faster and more secure. Blockchain can be used to ensure that AI and ML models retrieve data from verified sources, not to mention how AI can be used to analyze and predict changes in the market and make trading easier.
Many traditional banks continue or have begun integrating crypto and blockchain technology into their services. Giants such as JP Morgan have internally dedicated entire teams to develop crypto products.
According to a Coinbase survey, at least 80% of Americans are dissatisfied with the financial system as it is today. Cited reasons include it being too slow, expensive, biased, etc. The current financial system, built on processes, beliefs, laws, and procedures established over a century ago, is outdated. Hence, many forward-thinkers see crypto as a vehicle that could potentially revitalize and revamp the current financial system.
Ultimately, this has always been the goal behind crypto. It was created to gradually phase out the current financial system. As the adage goes: “Necessity is the mother of invention.” It’s not a coincidence that Bitcoin, the oldest modern crypto, was developed and introduced during The Great Recession.
Many believe that blockchain is the only solution to the problems created by traditional financial systems.
Tips for investing in crypto in 2023
Crypto is still worth investing in, especially with Bitcoin nearly half its average value (at the time of writing this article). But how should you approach investing in cryptocurrencies?
• Acquaint yourself with the basics
For years, many of us have relied on banks to safeguard and keep our money. Cryptocurrency flips this paradigm around; you are in complete control of your crypto finances. This means if a transaction goes wrong because you’ve made an error, you have to sort it out yourself.
There is no support staff to contact. Companies such as the Ethereum Foundation aren’t actual companies. They are decentralized peer-to-peer systems that follow a similar paradigm to the internet. Not a single person owns or controls it.
Thus, you must take security seriously at the onset of your trading or investment career. Additionally, you need to familiarize yourself with how the systems work. There is no compensation scheme for crypto.
• Only invest what you’re willing to lose
Because of the volatility of the crypto market, there is a high risk of losing your investment. Cryptocurrencies are essentially digital. This means that they are software, which runs on hardware that runs on electricity.
We’ve seen nations like the UK suffer blackouts due to global fuel shortages. If you have no access to power, you’ll have no access to your crypto. Moreover, while unlikely, a catastrophic Black Swan event could occur, wiping out all data and causing you to lose your crypto.
Thus, keeping or investing your entire wealth in crypto isn’t a good idea. While some experts claim that crypto is a viable long-term investment, most cryptos haven’t shown any signs of stability yet. Play for the short-term, at least until you’ve habituated yourself and understand the market.
• Choose your cryptocurrency carefully
Not all cryptocurrencies are built the same, as some are safer than others.
For instance, according to a recent survey, 64% of respondents believed Bitcoin was a safe investment to buy. And it’s true. Bitcoin is still the most reliable crypto, partly because only a limited number of bitcoins will ever be in circulation (21 million).
Other examples of crypto worth investing in and holding include Ethereum, Ripple’s XRP, and AVAX. Conduct thorough research on the pros and cons of your potential cryptos before committing to them.
Should you invest in crypto?
The above guide explores whether investing in crypto is still worth your dime. The answer is yes — but with a few caveats. Investment firms often promise exaggerated returns, as do social media influencers. They also underplay the risks. As a cryptocurrency investor, you must temper your expectations.
But although many have tried to prophesy cryptocurrency’s doom, crypto is the future of finance and worth investing in.