The financial sector is changing faster than ever before thanks to technology. One major player is cryptocurrency. You’ve probably heard of Bitcoin and how its value surged in 2017, but Bitcoin isn’t the only virtual currency that had a breakout year. There are hundreds of cryptocurrencies that people can invest in and achieve significant returns. But you might be wondering how a currency you can’t hold in your hands can gain value? That’s because it is actually an open-source technology called blockchain, which is a very secure method of logging monetary transactions made by businesses.
Although some people investing in Bitcoin and other cryptocurrencies may not understand blockchain technology and how value is gained, what they do know is that lucrative opportunities potentially exist right around the corner.
To know whether cryptocurrency is a good investment, it is important to look at the top three cryptocurrency predictions.
Prediction 1: Bitcoin Will Grow Exponentially
This may seem like a hyped-up prediction since Bitcoin lost some of its value recently. The fact about this cryptocurrency is that it is battle tested. Its beginnings were rough, and it has seen hard times, but it bounced back each time. The world is still early in the cryptocurrency game, but the transaction volume being logged in 2017 was 100 times greater in December than it was in January.
With so many institutional managers still sitting on the sidelines so they can watch blockchain technology and jump when they feel comfortable, there is plenty of room for more growth. Some experts in the financial community predict that Bitcoin will hit $40,000 in the very near future.
There is a good chance that this will be a wild and volatile ride. However, the consensus is that Bitcoin will come out on top and the other cryptocurrencies will grow. One reason why Bitcoin will continue to rule the cryptocurrency world is that it will most likely split more than it already has. The trend changed when Bitcoin split into Bitcoin Cash on Aug. 1, 2017, because the split was given a name.
When Bitcoin split into Bitcoin Cash, it gave investors another opportunity to get in on the game. Regular Bitcoin was trading for more than $16,000. Bitcoin cash traded for around $2,600. This made it possible for people not wanting to pay $16,000 a share to step into the cryptocurrency arena. Another split could open the door to a profitable investment opportunity, but the volatility of it shouldn’t be ignored. Bitcoin’s most recent drop had to do with regulatory actions, particularly in China.
Prediction 2: There Will Be Disruption in the Commodity Markets
Blockchain technology advancements will make it easier for marketplaces to create and bring a greater supply of electronic services. This will lead to more publicly traded digital commodities. It may even be possible for more data miners to be hired to help secure a certain crypto coin in exchange for rewards that are much greater than the block rewards that are already received for the work.
It’s currently not known what protocols data miners could use or which ones will come out on top, but whatever wins will most likely bring the doubters on board so that the market can be more complete.
Prediction 3: More Institutions Will Turn to Cryptocurrency
Ultimately, more institutions will turn to cryptocurrency as more is learned about it. As time progresses, more institutions will be exposed to the concept. In December 2017, Bitcoin futures launched, and now some are planning derivative products. It’s also expected that a Bitcoin exchange-traded fund will be approved by regulators by the beginning of 2019 at the latest.
So far, the U.S. Securities and Exchange Commission hasn’t said much on the cryptocurrency ETFs that were filed by the CBOE at the end of 2017. It is possible that these ETFs could go live in 2018, which would increase the involvement of institutional investors.
Should You Invest in Cryptocurrency?
Despite the volatility, the question is whether you should invest in cryptocurrency since the future still looks very promising. With so many currencies to invest in, it only makes sense, right?
To answer that question, here are some facts about cryptocurrency:
- Volatility means that the price can swing up and down by hundreds or thousands of dollars.
- The cryptocurrency market is young, which means that there is a lot of excitement among very optimistic investors, which can drive the price up to very profitable levels.
- It looks like Bitcoin is going to stick around, but it’s possible that it may not be the sole winner or the only winner as more cryptocurrencies continue to climb in popularity and value.
- Even if cryptocurrency is part of the internet bubble, it is still trending toward being a very important exchange.
- If you don’t like risk, cryptocurrency may not be the right investment for you.
- Regulators in China, Russia, and the U.S. can have a major influence on cryptocurrencies. Regulating agencies can’t destroy it, but the influence can be heavy.
- There is a lot of money to be made if you buy and sell right.
- You must go through Coinbase or buy GBTC to trade cryptocurrency. Each of these gateways comes at a premium. However, you can use an open exchange on the internet, so the fees are lower, but the complexity is higher.
- The release of too many coins in a short period could flood the market with low-quality coins, which could make things tricky for investors. It can be tempting to invest in a new coin in hopes it will grow in value, but it is best to do the appropriate research before making that move.
- Cryptocurrency is decentralized, which means the banking system has nothing to do with it. This makes it a very exciting asset to own.
- When investors get spooked by a little bad news, prices can drop. However, the prices can bounce back the next day or the next week.
If you’re not sure about investing in cryptocurrency, that’s OK. You can sit back and watch before you take the dive. It can be a very exciting opportunity, but it should be an opportunity that you are comfortable with.
Keep in mind that you don’t have to be wealthy to invest in cryptocurrency. Even if Bitcoin is higher than you would like to pay, there are other growing cryptocurrencies, like Litecoin, Ethereum, Dash, Ripple, Zcash, and Monero, that you can invest in so that you can get in on this exciting opportunity.
As for the funds needed to get started, you can use money that you have already put away or use a percentage of your income to take this step if doing so won’t take away from your living expenses. Some people turn to a personal loan to make that initial investment. However, it isn’t recommended to use a loan to make an investment because the loan still has to be repaid in the event the investment fails. Loans are better suited for refinancing old debt, home improvements, buying cars, or taking vacations.
Just make sure that you are always aware of how the market is performing. There is always a lot of buzz on the internet that can be indicators of when it is good to buy and sell. There is a lot of long-term potential in cryptocurrency, and it will be exciting to see where it goes from here since there is so much excitement surrounding it.