For all its merits and advantages, cryptocurrency is still very volatile. It’s volatile enough to make you lose all your money while investing in Bitcoin, despite their current high price of Bitcoin and constant upward graph. Investing in Bitcoin or other cryptocurrencies has a fundamental difference from investing in stocks. While it may seem like an oversimplification to say that your money is safer when invested in stocks of reputable companies, it still holds true for the major part. When you buy a stock of a company with a historical record of profits or you choose an index fund, your money is more likely to be safe than it would be in cryptocurrency.
The fundamental difference between Bitcoin and a stock is that nobody owns Bitcoin. It is a global system that works courtesy of Bitcoin miners and decentralized exchanges. Unlike with stock, there are no quarterly reports, no way to predict which way the market will go in the future, and very little to understand which cryptocurrency has more promise.
However, what many people do not understand is that cryptocurrency is here to stay. As with traditional stocks and bonds, a period of slump will follow a period of highs. But crypto’s volatility makes these highs and lows much more extreme than what they would be in traditional investment instruments. In the end, it is about greater risks for greater rewards. Cryptocurrency has literally made people millionaires overnight. With great potential comes great risks – that is something crypto investors must understand before stepping into the market.
