There’s little doubt that digital currencies have seen remarkable growth. Spurred on by the incredible growth of bitcoin (BTC) and ether (ETH), the field of cryptocurrencies has only continued to expand.

In addition to initial coin offerings (ICOs), there are now many new types of blockchain investment products, from decentralized finance to non-fungible tokens. Many digital currency enthusiasts believe that these investments could produce a new batch of digital currency millionaires (or billionaires). But those who have not yet invested in the digital currency space may be wondering if there are compelling reasons to start now. Below, we’ll consider some of the reasons people might want to buy digital currencies, as well as some other considerations before investing.

• Cryptocurrencies have been described as a transformative technology that could revolutionize a number of industries.
• Because they cannot be printed or seized, cryptocurrencies may also provide a safe store of value.
• However, cryptocurrencies remain highly speculative, and there is no guarantee that they will ever achieve mainstream usage.
• There are several complex security protocols that should be followed carefully before buying cryptocurrency.

Does Your Financial Advisor Speak Crypto?

 

It’s pretty much impossible to avoid frequent headlines declaring that Bitcoin or some other new cryptocurrency is the gold standard of the new world of digital assets. Nobody wants to miss out on a gold rush, but Bitcoin isn’t gold, and neither are its rival protocols such as Ethereum, Solana, or FTX Exchange Token. However, just as with gold mining, crypto mining involves expending energy to acquire something that, depending on the coin’s inflation schedule, may have finite availability.

As of March 2022, there were more than 12,000 cryptocurrencies that facilitate peer-to-peer transfers of data and value.¹ What may be surprising is that in a 2022 study done by Investopedia regarding financial literacy, 49% of adults, when asked how well they understood crypto, said they were “beginners.” Where does this leave the individual who believes in the future of these crypto-assets but can’t figure out how to invest in them? A modern advisor who is well versed in crypto can help you make sense of this rather new landscape.

 

Thefts, Scams, and Other Losses

One of the most impressive and unique aspects of cryptocurrency is also a significant liability. Since cryptocurrency does not rely on a central intermediary, it falls on the user to safely store the cryptographic keys which control their blockchain address. Investors who choose to explore the digital currency space should be aware that a number of special security measures are absolutely necessary, and that even those measures may not sufficiently protect their holdings against hackers working constantly to refine their techniques.

Theft remains one of the most common threats to cryptocurrency users, and hackers have stolen tokens worth billions of dollars from exchanges, wallet software, and ordinary users. In addition, there are also a number of schemes to trick users into giving up their tokens, such as doubling scams, social engineering, market manipulation, and even fake ICOs.

But another major threat is the users themselves. Unlike other applications, most digital wallets cannot be reset if you forget the passphrase. Users have lost hundreds of millions of dollars worth of cryptocurrency due to forgotten passwords or lost devices.

How to Buy Crypto?

If you’ve spent time studying blockchain technology and you want to invest in it for what it is—and not as just another investable asset—you may have to do the heavy lifting and buy the cryptocurrency yourself. To do so, you need a digital wallet, such as a Bitcoin wallet, in which to store your cryptocurrencies securely.

To convert any cryptocurrency into cash, look for an exchange that supports trading the currency you want to purchase, such as San Francisco-based Coinbase, one of the more well-known exchanges. This digital currency exchange allows you to buy and sell Bitcoin, Ethereum, and other crypto products in your local currency, called fiat currency.

So It is a smart decetion to invest in Crypto.