Still a debate, these are the pros and cons of crypto investment
Investing is a good decision to maintain finances. Investment instruments are very diverse, ranging from assets with low to high risk.
However, you need to remember that in the investment formula, the greater the risk, the greater the potential profit. One instrument that is currently classified as high risk and has the potential to provide large profits is crypto.
Crypto is a digital currency whose value is not regulated by the government or central bank, but is regulated using blockchain technology. Basically, fiat currencies, such as the rupiah and the dollar, no longer have underlying assets in this modern era. Previously, fiat had an underlying asset in the form of gold, but the United States eliminated it in 1971.
On the other hand, crypto, as a digital currency, also does not have an underlying asset. However, pro crypto investors view that the underlying of crypto is blockchain technology. Investors can gain profits from investing in crypto through price increases. Quoting BankRate, crypto price movements are based on speculation from sentiment.
Of course, this choice will also depend on the investor’s risk profile. Following are the pros and cons of investing in crypto from various sources and analysis by the CNBC Indonesia research team
Benefits of Investing in Crypto Assets
Fiat currency hedging is an advantage of crypto as a currency that rebels against the fiat system, considering that it is naturally not regulated by governments and central banks. Usually, a weakening fiat currency will increase the value of crypto and vice versa.
The potential for high profits is the reason to invest in crypto. Since November 2015, Bitcoin has returned 85 times or 8,500%! Investing IDR 1 million in Bitcoin at that time will grow to IDR 85 million.
Read more : Ligautama
The increase in the number of cryptocurrencies and their demand due to the Covid-19 pandemic has led almost central banks throughout the world to implement policies to increase the number of fiat currencies. This makes market players increasingly doubtful about the government and central bank regarding the potential for inflation and interest rate increases in the future.
This makes market players invest in assets versus fiat currency, so that interest in crypto increases and many new cryptocurrencies emerge.
Cons of Investing in Crypto Assets
Crypto’s high volatility is the risk behind its high returns. The high increase in crypto prices was followed by a high decrease. Therefore, crypto is often referred to as an asset with high risk and high returns or “high risk, high return”.
The risk of cybercrime is a risk of digital currency. The increase in digital quality is accompanied by digital criminals too. Lost
Crypto does not have intrinsic value like shares which have an underlying asset in the form of a company.