A study from Finder found that over 59 million Americans now own digital assets. The Harris Poll put that number at 13%. However, a University of Chicago survey from June 2021 found that almost one in ten respondents had invested in cryptocurrency within the past year. This number is much higher than the average in the stock market. And while there are many risks involved, it is still far easier to invest in crypto than it is to invest in traditional currency.
Investing in cryptocurrencies is easier than acquiring a traditional currency
Although it’s easy to invest in cryptocurrencies, they do carry a risk. If you want to avoid losing money, you should do your research first. There are some advantages to cryptocurrencies that conventional investments don’t have. One such advantage is that cryptocurrencies offer price swings and opportunities that conventional investments do not provide. Besides that, staking a crypto allows you to earn money by participating in the network. This process increases the security and efficiency of the underlying blockchain, and rewards you with more assets from the network.
The supply of most cryptocurrencies is highly regulated. Most are managed by computer programs. Bitcoin, for instance, has a limited supply of 18.5 million units and will eventually be created to a maximum of 21 million coins. This scarcity creates value in cryptocurrencies, but it is not enough to generate a high demand. Moreover, cryptocurrencies cannot be used as payment systems in most cases. Their only value comes from people thinking of them as good investments.
It is more popular with men than with women
Although cryptocurrency is a new industry, men have a slightly higher interest in crypto than women. According to CNBC, only about 13 percent of American women in their thirties and forties have invested in crypto. That number is much higher than the percentage of men in their late teens and twenties. However, more women are now getting into the crypto space thanks to the creation of female-themed organizations.
The lack of female participation in the cryptosphere has a negative impact on women’s interest. Men are nearly three times more likely to say that they are the main decision-maker for crypto investments than women, and this trend is even more pronounced in emerging markets. While men generally take the lead in making their own investment decisions, women tend to earn better investing results. That’s because women have better understanding of risk, have longer-term thinking and make fewer trades.
It is more volatile than a traditional currency
There is no denying that the cryptocurrency market is wildly volatile, but this is normal. This type of volatility is inherent to all financial markets, and while it may seem like a bad thing to an investor, it can actually prove to be a good thing. While investors should understand the volatility of a particular asset to determine if it’s right for them, it’s also helpful to compare the volatility of a particular asset with that of similar assets. For example, a cryptocurrency with a low volatility will have a stable price, whereas one with high volatility will see rapid fluctuations. This volatility is a sign of risk, and it should be respected.
Because of this volatility, people understand the risks and rewards that come with investing in a volatile market. After all, many investors have experienced a market crash and understand how painful it can be. In fact, this has been the main reason that regulation is so widespread in the cryptocurrency industry. This constant work on the part of regulators has made cryptocurrency a more attractive investment for those who are willing to take risks and endure the regular ups and downs.
It has its share of risks
There are a number of ways to get exposure to crypto assets, including direct investment in coins, derivative instruments, and stocks that invest in blockchain technology. But even though cryptocurrencies have a high potential for growth, they also come with their fair share of risks. Traditional financial risk models simply do not work well when analyzing crypto assets. For example, a Two Sigma Factor Lens analysis of Bitcoin shows that the cryptoasset has a high idiosyncratic risk, positive correlations to the global equity market, a strong relationship with existing risk factors, and a tendency to behave like an inflation-sensitive asset.
The cutting-edge technology elements of crypto also increase the risks for investors. While much of the technology that powers cryptocurrencies has not yet been extensively tested in real-world scenarios, it is still developing and not yet widely adopted. Despite its risks, however, the blockchain industry and cryptocurrency are growing steadily. Institutional-grade custody services are gaining greater availability and professional investors are gradually receiving tools to manage their crypto assets. To be sure, a monitoring program is essential for the success of cryptocurrencies.