01-08-2020 icon

Should I Invest in Cryptocurrency? – Pros and Cons of Investing

By Bitcoin Nigeria

“Should I invest in cryptocurrency?” It’s a question almost every Nigerian is asking. Ten years ago, after all, investing $100 in Bitcoin would have made you a multimillionaire by now. Sadly investing today is a lot more high-risk.

Are you considering investing in cryptocurrency in 2020? If so, you would be wise to familiarize yourself with the basic pros and cons of cryptocurrency investing first.

Should I Invest in Cryptocurrency? – Basic Pros

The main pros of investing in cryptocurrency are simple. No other financial instrument has made near the same gains as Bitcoin since 2009. There are also a lot of reasons why people believe that Bitcoin, in particular, will rise further in value.

  • Bitcoin has more users than ever previously.
  • Major businesses are already starting to accept Bitcoin and other cryptocurrency payments.
  • The number of Bitcoin available to purchase at exchanges will be cut by half in 2020. This will increase scarcity and (presumably) BTC prices in the process.
  • Since 2009, few countries have moved to ban Bitcoin. Many also argue that banning Bitcoin is no longer possible.

As we enter into 2020, it is also worth noting that Bitcoin is almost 11-years old. This makes Bitcoin the longest surviving cryptocurrency on the market. Bitcoin has also performed better than most conventional tech startups, 80% of which fail in their first 5-years of trading.

Should I Invest in Cryptocurrency? – Here are the Cons

When it comes to the downside of investing in cryptocurrency, the cons are simple. As it stands, there is no guarantee that investing in cryptocurrency in 2020 will result in significant returns.

At present, there are over 1,600 forms of cryptocurrency in existence. Many of these have at one point peaked in value. However, almost all are now worthless. There is also an ever-present threat that even today’s top digital currencies might one day become obsolete.

  • New technologies mean that several forms of cryptocurrency exist that rival coins like Bitcoin in terms of their technological capabilities.
  • All cryptocurrencies need to be actively developed to maintain security. However, this also makes cryptocurrency projects prone to mismanagement.
  • As more banks start creating digital currencies, governments may legislate against existing coins like Bitcoin.

It is also the case that investing in top cryptocurrencies today is riskier than it was 10-years ago. Coin prices are higher, and the cryptocurrency market is a lot more volatile. This makes short-term and long-term investing very high-risk for average Nigerians.

Should I Invest in Cryptocurrency?

Because the cryptocurrency prices are so volatile, no Nigerian should ever invest more in coins like Bitcoin than they are willing to lose. It is also the case, that Nigerians should be very careful when deciding on assets to invest in.

As a rule, new to market cryptocurrencies and ICO coins have performed poorly overall over the past 10-years. It is, therefore, vital that people conduct thorough research before investing in any digital asset. Most new to market investors would also be wise to decide on long-term, rather than short-term trading and investment strategies.