Things To Consider Before Investing In Cryptocurrency – A Detailed List

Are you a business person who has been thinking about whether or not to invest and how to invest in cryptocurrency? Don’t worry. You will get your answers in this article.

Let us begin with what cryptocurrency is. It is virtual or digital money that acts as ordinary money like pounds, dollars, etc. However, it has no physical counterparts such as coins or cash, and it exists only in electronic form. The idea of cryptocurrency was first developed in 1998. However, it has gained immense popularity only in recent years. Its value is rapidly increasing with each passing second, so now more people are interested in it than ever.

Virtual currency is not regulated and balanced. Hence, it is very risky to invest in. The nature of every kind of digital currency is uncertain, and regulators worldwide have announced an increased lapse, which raises the question for you – is investing in cryptocurrency a good idea for an Indian businessman like me? All this attention prompts questions like “What is it about?” “What are the risks?” etc. For you, these can only be answered by understanding all the advantages and disadvantages of cryptocurrency.

Here are some of the advantages and disadvantages of cryptocurrency every business person should know about before investing in them.

Advantages of Cryptocurrency

1. Decentralisation eliminates middlemen

The first virtual currency advantage is that it eliminates the middlemen. Crypto is a digital asset. The public has access to it, and there is no central authority to regulate it. This eliminates the middleman. Because of this, banks fear that it will seriously disrupt the industry. The money is stored in an electronic wallet, and therefore, there is no transaction cost. Even the government is not involved in the production of any cryptocurrency. This works out wonderfully for consumers, including business people.

2. Decrease transaction fees

A decrease in the transaction fees in your business is another advantage to digital currency. If your business is contemplating whether to accept cryptocurrency in exchange for your products and services, this can be the bottom-line benefit of cryptocurrency that there will be no direct processing fee. Cryptocurrencies are decentralised; thus there is no involvement of a third party. A single authority does not control it. Instead, it works directly through blockchain technology.

3. Make payments faster

Transactions with cryptocurrency happen immediately, unlike several credit card payments that take days to clear. This is another advantage of virtual currency that you can have access to coin payments in seconds. This gives greater financial security to your business.

4. Legitimacy is the reason behind its rise in value

In the last few years, there was a surge in the value of digital currency, and nobody could understand the reason behind it. This is because many countries and stores started accepting this new form of currency, which boosted its value. When major stores in different countries accepted crypto for their transactions, they legitimised it, which led to an increase in its price. Another factor that made it legitimate is the creation of other smaller cryptos. When they were put on the blockchain, buyers hoped that their value would increase in the future.

5. Increase customer access

If you start offering coin payment methods, there are chances of an increase in your audience of buyers. Virtual currency is non-governmental, which means your business could see an increase in global clients when its use grows. It could prove to be an ideal way to conduct global business. There are a lot of B2C businesses that are accepting this mode of payment, whereas, in the case of B2B businesses, fewer are accepting this currency. However, this is likely to change as the marketplace evolves. Thus, in the long run, this can help you attract new customers.

6. Prices keep growing

One of the major advantages of cryptocurrency is that its price and demand will eventually increase since more people have started to use it as their primary currency. Businesses understand the importance that cryptocurrency plays as it is the supreme solution to all their problems related to money handling. This attracts both small and big businesses, which clears the confusion of whether investing in cryptocurrency is a good idea for Indian businesspeople. It is just a matter of time before cryptocurrency increases the profits manifolds for all investors.

7. Government support

The last advantage of cryptocurrency is government support. Bitcoin is a public currency, but the government needs to approve it for people to use it. No government controls cryptocurrency, but almost all governments have allowed people to deal with this currency. This means that cryptocurrency is legally verified to store your assets and make transactions. This is a major factor to keep in mind before investing in cryptocurrency as a business person. Because of its honesty and security features, it has earned the trust of governments worldwide, making it one of the most powerful currencies.

Disadvantages of Cryptocurrency

1. There are risks

There are a few disadvantages of cryptocurrency as well. We have already talked about the currency’s instability that makes it difficult to predict. Thus, when you use it in a business transaction, you should be prepared to risk losing all of it. Secondly, crypto is connected with the dark web and several unclean deals. So, when a business accepts cryptocurrency as the mode of payment, there can be a connection with some deals that can prove damaging. This is very important to keep in mind before investing in cryptocurrency as a business person.

2. It is unpredictable

Cryptocurrency does not have any fixed value, which means it is unpredictable. Before investing in cryptocurrency, keep in mind that its value keeps fluctuating. Its value is affected by unknown factors, which is a major disadvantage of cryptocurrency. Remember that this currency could be all gone any day. You would never want to conduct all your business sales in this currency. This concept is still relatively new and evolving and is still being observed.

3. Lack of regulation

This is another digital currency disadvantage. The governments of different countries have issued varying regulations because of the unfamiliarity of cryptocurrency. This makes lack of regulation another disadvantage of cryptocurrency to consider. This means that there is uncertainty for the businesses that deal in cryptocurrency as they cannot predict what kind of taxes and investment limitations will be imposed on them in the future.

Through this article, you have learned about several important facts related to cryptocurrency and what it will do to your business if you invested in it. Considering the current scenarios, cryptocurrency is one of the best ways to earn huge profits. Cryptocurrency is hitting new heights every day, and it is thought of as the next big financial break. Besides, who doesn’t want their investment’s value to skyrocket in a small amount of time? There are still many risks related to investing in cryptocurrency because, as a businessman who has poured hard-earned money into something like this, you would like to predict the chances of losing it all.

Also read:

1) A-Z About Cryptocurrency in India
2) Cryptocurrencies: Are They Reliable in Business?
3) How are crypto-currencies taxed in India?
4) Digitalisation - The next step in the evolution of Digital India
5) OkCredit: Simple, Paperless & Secure solution for businesses

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FAQs

Q. Is cryptocurrency a good investment in 2021?

Ans. It is a great digital asset to invest in. There are a lot of options available for you if you are thinking of investing in cryptocurrency.

Q. Which is the best cryptocurrency?

Ans. You can go with Bitcoin, Cosmos, Bitcoin Cash, Polkadot, etc.

Q. Can a business invest in cryptocurrency?

Ans. Businesses can invest in cryptocurrency as they are not illegal. Anyone can buy, sell or trade different cryptocurrencies if they want to.

Q. How much should I invest in crypto?

Ans. While investing in cryptocurrency, one rule of thumb is to not invest more than 10% of your portfolio in individual stocks or several risky assets.

Q. Is cryptocurrency real money?

Ans. Cryptocurrency is not real money. It is a virtual currency or a digital asset that is based on an algorithm. It is in the form of a token that you can sell in return for cash.

Q. How to invest in cryptocurrency?

Ans. If you want to learn how to invest in cryptocurrency, the first thing you need to know is that you should allocate only a small portion of your portfolio to them. Then you need to choose a cryptocurrency, a platform to buy them and then decide how to store them securely.