What to consider when investing in cryptocurrencies By Investing.com

Investing.com – Cryptocurrencies have hit hard. They attract and fill many of the investors, both regular and new, with curiosity, since there is a lot of attraction from young people. The precious metals trading platform Coininvest.com offers some advice when it comes to investing.

• Direct Control: Crypto investing provides complete independence and control. You do not need to deal with banks or other financial institutions.
• Transparency: Blockchain technology monitors and records every transaction in a fully transparent system. They cannot be modified or changed once completed.
• Simplicity – Generally simple and uncomplicated compared to investments like stocks.

cryptocurrency challenges

As specified by coininvest.com, many cryptocurrencies use blockchain technology, which is a decentralized system that tracks the transaction of digital assets. As complex as the technology is, infrastructure enhancements that seek to drive scalability have become potential vulnerabilities.

To meet global demand, cryptocurrencies like to rely on off-chain transactions, where users buy and sell coins, undermining the fundamental purpose of using the technology in the first place. Off-chain transactions introduce security flaws as they can be modified before being written back to the blockchain, allowing foul play with people’s money.

Blockchain transaction processing for bitcoin exchanges is also inefficient and consumes a lot of time and energy. In fact, it was shown earlier this year that bitcoin consumes more electricity per year than the entire country of Argentina. Despite the massive energy consumption, fewer than 10 transactions are written to a blockchain per second, leading critics to accuse cryptocurrency miners of reckless environmental damage for a merely speculative asset.

Instability is an inherent part of the crypto world

Cryptocurrencies, unlike precious metals, have no intrinsic value. They serve no other purpose than to be a vehicle of exchange. And because they are considered investment assets, as anyone from casual to institutional investors see the returns they can get from dabbling in crypto, they are still very unpredictable, rising when it’s hot and crashing when people cash in their investment.

For example, the price of halved between February and March of last year, quadrupled by the end of the year, set all-time highs in January, and then plummeted 15% just a few months later. Physical precious metals, on the other hand, can be found in medical equipment, electrical devices, jewelry, and other places. This means that there is always a constant demand for the precious metal, which keeps precious metal prices relatively stable.