In the developed world, cryptocurrencies are generally legal, but they are not regulated by central governments. The risks associated with investing in cryptocurrencies may be high until these assets are regulated by federal governments. Moreover, most cryptocurrencies require private keys in order to access their tokens. The loss of these private keys can lead to the total loss of tokens, which cannot be recovered. You can only gain from cryptocurrency if someone else pays you more than you did initially.
The ultimate benefit of cryptocurrency is that it can be used to diversify your portfolio from traditional assets. Cryptocurrency diversifying your portfolio can produce better returns over time since the market does not appear to be correlated with the stock market. The cryptocurrency asset's rise can also benefit you if your portfolio's stocks decline. It may seem like a wise idea, but the general volatility of cryptocurrencies can also make your overall portfolio more volatile. This is why cryptocurrency investment strategies need to be carefully chosen.
Even if you invest small amounts in cryptocurrencies, the returns can be substantial. In 2013, a $1,000 investment in Bitcoin would be worth over $400k today. In addition, recent ICOs have led to huge returns in a relatively short period of time. For instance, Spectrecoin raised $15,000 during its ICO in January 2017 and has since risen up over 13,000 percent.
There are no statistics about the returns of cryptocurrencies, but there are some things to consider. There's no clear average return, and cryptocurrencies may be more volatile than other investments. While stock markets have historically returned ten percent per year, cryptocurrency prices can reach ten times that amount in a single day. A key factor in determining whether cryptocurrency is the right choice for you is your time horizon. Some experts recommend that investors invest for a minimum of three years and that they should be patient enough to ride out the volatility.
During the first decade of the cryptocurrency market, Bitcoin was only worth one U.S. dollar and has since doubled to $64,000 per coin. Because cryptocurrencies are traded based on sentiment, it's important to remember that there are no economic fundamentals to back their value. While stocks have a definite underlying value based on company profits, cryptocurrency doesn't. Therefore, purchasing a cryptocurrency doesn't mean owning blockchain technology.
Before investing in cryptocurrencies, it's important to understand the investment case. Buying stock requires reading the prospectus and analyzing the company. In the case of cryptocurrencies, investing in a specific cryptocurrency can be difficult because there are thousands of cryptocurrencies, and new ones are created every day. You should understand the risks and rewards of each type of investment and then proceed accordingly. You can read up on these risks by reading a beginner's cryptocurrency trading guide.
If you have the desire to use your cryptocurrencies for gambling, watch our list of potential casinos to choose from.
