To understand is cryptocurrency a safe investment we first have to understand in some basic language what is a cryptocurrency and how is it valued.
We can say that the cryptocurrency is the money of the internet. Basically, the two words once separated mean two different things the crypto name is due to its base on the cryptography technology and the currency means money. It’s a new technology that has massively developed in the recent few years and there are way too many of them in existence at this moment. One of the first cryptocurrencies is the famous Bitcoin. It’s also the currency on which every other base its value.
The “internet money” is being made by “mining” and without going to deep into these explanations miners are basically people who have devoted their computers and its computing power to the cryptocurrency web where they act as the bookkeepers and get rewarded for their “work” with the cryptocurrency that they are mining.
With that being said we can now get into explaining the pros and the cons of investing into cryptocurrency and we can figure out if it’s safe or not.
The online currency market is saturated with new coins and they keep popping up almost every month. This can be good since its massively representing the potential of the crypto coins, but it can also be bad as many of those coins will fail and so many people will lose their invested money.
The online coin market and the value of a certain coin is not based on any physical value, but is, in fact, basing its value on how big its trading power is, how many people are mining and therefore invested in the web, and last but not least, how much people value it as an online coin. There are many factors that decide how the value of a coin will fluctuate, but the fact of the matter is that it can fluctuate without any logical reasons as well. This makes it an amazing investment as you can see a fast return on your investment, or it makes it a terrible investment as you could also potentially lose all your invested funds within minutes.
The truth is that there is no “safe” investment in anything in the online currency market and people who are interested in investing their money in certain coins should only invest if they can afford to lose the invested money. Investing in cryptocurrency as a secondary means of making money is a surefire way of ending up in quicksand.