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Is the Crypto Market Still Worth Investing in?

Updated on November 26, 2019
Emma Sumner profile image

Emma is a marketing specialist from New Zealand. She's been working as a digital marketer for 5 years

Are Cryptocurrencies Still Worth Investing in?

There's no doubt that trading with digital cryptocurrencies carries some risk. It's safe to say that it's not a suitable investment for everyone. Yet, Bitcoin has evolved into a global, mainstream buzzword.

It has already proved that its value can reach astonishing numbers. While many are deterred by the 2018 crypto-crash, others see it as an opportunity. But, what's the right move? Beneath all the media tropes, what does the market really say about the future of crypto?

How to Invest in Cryptocurrencies

If you want to Hold Bitcoin, Litecoin, Etherium, or any other digital coin, you need to have a special wallet (Trezor, Atomic Wallet). You can also open an account on an exchange, such as Kraken, Coinbase, Bittrex, etc. and keep your assets there.

You can buy cryptocurrencies on an exchange. Buyers can transfer them to their cold storage (wallets). You can also invest through a cryptocurrency IRA or through an investment trust in the stock market.

The Pros

The Valuable Tech

The innovative, revolutionary technology behind digital cash is arguably its greatest value. Thanks to blockchain, the ledger behind each digital currency, there's no need for trust between the parties. Moreover, the ledger is transparent, the transactions are fast, there's no danger of counterfeits, and there are no fees.

There's no need for banks and other middlemen. The idea behind it is to improve the current age-old financial system. Some signs show it's actually happening. Various banks and stock markets have started using blockchain. There are even crypto-banks that entirely revolve around digital assets. Other industries and even governments are making use of technology.

Legitimacy

Bitcoin, Litecoin, and Etherium have become reputable assets. More and more businesses accept them as a means of payment. More importantly, global leaders approve of them as legal tender. Since the move gives investors an opportunity to turn huge profits, they have taken it as a good sign.

Even banks have started to accept Bitcoin. However, not all governments have the same stance. For instance, you can lawfully buy litecoin in the UK, while it is practically outlawed in China. However, the fact that Western countries weren't quick to ban digital money and still allow you to exchange them for real-life valuables can be considered a green light.

Value

Despite fluctuations, Bitcoin and altcoins are steadily growing in value. Even after multiple market crashes, all major coins are worth much more than they did in the beginning. New bubbles and crashes can always happen.

However, the high-volatility seems to be a thing of the past. Most long-term investors and enthusiasts have gained an incredible ROI. Bitcoin is worth 1338% more now than it used to be five years ago.

Holding digital money seems to be much better than trading. The Bitcoin community has even coined a word for that - HODL (Hold On for Dear Life). So far, the ones who listen to them profit the most.

The Cons

The Domino Effect

Bitcoin, the first digital coin, still has the biggest effect on the whole market. 2018 was hardest on Bitcoin and consequently on all altcoins (Bitcoin alternatives). At its peak, Bitcoin had been worth almost $20,000. However, the value came down quite hard in 2018.

It was an eye-opener for many: the value of all digital coins decreased by 75%. For now, all coins are shadowed by Bitcoin, at least in the mainstream. But, the mainstream is what dictates the value of all of them.

Bitcoin's famous relatives, such as Litecoin, ETH, and Ripple operate on somewhat different principles and have their own, unique features. However, we still don't know if they can escape Bitcoin's grip.

Most experts think Bitcoin, Litecoin, and ETH make for a better investment than other cryptocurrencies. They have been around for longer and one could say they've stood the test of time.

There are over two thousand coins in the market. Almost half of them are worthless. There are lots of frauds in the ICOs (initial coin offering) of young coins. The failure of new coins can jeopardize people's trust in altcoins as a concept.

Regulation

The U.S SEC has denied many Bitcoin ETF proposals. There is a big lack of acceptance among investors. Warren Buffet and some other famous and reputable investors have stated negative opinions about investing in cryptocurrencies.

Russia, India, and China have enacted restrictions on the use of digital coins. Each time such a world power implemented strict laws on digital currencies, the value of all cryptocurrencies plummeted.

While Western governments accept digital assets as legal tender, we can still expect them to start regulating them. The absolute freedom that digital coins offer is likely coming to an end. Regulation may deprive digital currencies of one of its key strengths. Regulation in the West could stifle the growth of crypto and limit its true potential.

Bottom Line

While the market continues to grow, the future is still clouded. It will take some time for the market to sort itself out entirely. Experts disagree on whether that means it’s a sign to invest now, or a caution not to invest at all.

One thing is clear: coins may come and go, but the technology is here to stay. Since exploring cryptocurrencies as an investment can lead to a massive headache, alternatives such as blockchain-based startups may be easier to figure out.

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