Will The Money Go From Stocks To Cryptocurrencies?

NEWS Alert: In a contempo interview, a top official of the U.S. Hugger-mugger Service said that the agency has confiscated more than $102 million of cryptocurrency assets from criminals since 2015. The investigations are reportedly similar to tracking criminal emails, and the Secret Service has seized crypto in 254 different cases during this period. Some investors were shaken past the statement while others applauded the efforts to take hold of criminals and build trust in the cryptocurrency market place.

Information technology's possible to get filthy rich by investing in cryptocurrency in 2022 -- simply you could too lose all of your money. Investing in crypto assets is risky but also potentially extremely assisting.

Cryptocurrency is a expert investment if you want to gain direct exposure to the demand for digital currency. A safer just potentially less lucrative alternative is buying the stocks of companies with exposure to cryptocurrency.

Let's examine the pros and cons of investing in cryptocurrency.

Is cryptocurrency prophylactic?

Several factors make cryptocurrency a not entirely safe investment. Withal, other signs are emerging that cryptocurrency is here to stay.

There are numerous risks associated with crypto. Investors and users must decide for themselves if the benefits outweigh these risks.

Cryptocurrency risks

Cryptocurrency exchanges, more than so than stock exchanges, are vulnerable to being hacked and becoming targets of other criminal activity. Security breaches have led to sizable losses for investors who have had their digital currencies stolen, spurring many exchanges and tertiary-party insurers to begin offering protection against hacks.

Safely storing cryptocurrencies is also more hard than owning stocks or bonds. Cryptocurrency exchanges such as Coinbase (NASDAQ:Coin) make it adequately easy to buy and sell crypto assets such as Bitcoin (CRYPTO:BTC) and Ethereum (CRYPTO:ETH), just many people don't like to keep their digital assets on exchanges due to the risks of allowing whatsoever company to control access to their avails.

Storing cryptocurrency on a centralized exchange means yous don't have full control over your assets. An substitution could freeze your avails based on a government asking, or the exchange could become broke and you'd have no recourse to recover your money.

Some cryptocurrency owners prefer offline "cold storage" options such equally hardware wallets, but common cold storage comes with its own set up of challenges. The biggest is the risk of losing your individual key; without a fundamental, it'due south impossible to access your cryptocurrency.

At that place's besides no guarantee that a crypto project you invest in will succeed. Contest is trigger-happy amongst thousands of blockchain projects, and many projects are no more than scams. Only a small percentage of cryptocurrency projects will ultimately flourish.

Regulators may likewise cleft down on the entire crypto manufacture, peculiarly if governments view cryptocurrencies as a threat rather than an innovative technology.

The cutting-border engineering science elements of cryptocurrency also increase the risks for investors. Much of the tech is still existence developed and is non nevertheless extensively proven in real-world scenarios.

Cryptocurrency adoption

Despite the risks, cryptocurrencies and the blockchain industry are growing stronger. Much-needed financial infrastructure is being congenital, and investors are increasingly able to access institutional-course custody services. Professional and private investors are gradually receiving the tools they need to manage and safeguard their crypto assets.

Crypto futures markets are existence established, and many companies are gaining direct exposure to the cryptocurrency sector. Financial giants such as Cake (NYSE:SQ) and PayPal (NASDAQ:PYPL) are making it easier to buy and sell cryptocurrency on their popular platforms. Other companies, including Block, accept poured hundreds of millions of dollars into Bitcoin and other digital avails. Tesla (NASDAQ:TSLA) purchased $1.5 billion worth of Bitcoin in early 2021. By February 2022, the electric vehicle maker reported that it held almost $ii billion of the cryptocurrency. MicroStrategy (NASDAQ:MSTR) -- a business intelligence software company -- has been accumulating Bitcoin since 2020. It held $v.7 billion in the cryptocurrency by the stop of 2021 and said it plans to purchase more with backlog cash generated from operations.

Although other factors still bear upon the riskiness of cryptocurrency, the increasing pace of adoption is a sign of a maturing manufacture. Private investors and companies are seeking to gain direct exposure to cryptocurrency, because it safe plenty for investing large sums of coin.

Is crypto a practiced long-term investment?

Many cryptocurrencies such every bit Bitcoin and Ethereum are launched with lofty objectives, which may be achieved over long time horizons. While the success of whatever cryptocurrency project is not assured, early investors in a crypto project that reaches its goals can be richly rewarded over the long term.

For whatsoever cryptocurrency project, nevertheless, achieving widespread adoption is necessary to be considered a long-term success.

Bitcoin every bit a long-term investment

Bitcoin, every bit the nigh widely known cryptocurrency, benefits from the network consequence -- more people want to own Bitcoin because Bitcoin is owned by the most people. Bitcoin is currently viewed past many investors equally "digital gold," but it could also be used as a digital form of cash.

Bitcoin investors believe the cryptocurrency volition gain value over the long term because the supply is stock-still, unlike the supplies of fiat currencies such as the U.S. dollar or the Japanese yen. The supply of Bitcoin is capped at fewer than 21 million coins, while most currencies tin can be printed at the will of key bankers. Many investors await Bitcoin to gain value as fiat currencies depreciate.

Those who are bullish about Bitcoin being extensively used as digital cash believe it has the potential to go the beginning truly global currency.

Ethereum equally a long-term investment

Ether is the native coin of the Ethereum platform and tin can be purchased by investors wishing to proceeds portfolio exposure to Ethereum. While Bitcoin can be viewed equally digital aureate, Ethereum is building a global calculating platform that supports many other cryptocurrencies and a massive ecosystem of decentralized applications ("dApps").

The large number of cryptocurrencies built on the Ethereum platform, plus the open-source nature of dApps, creates opportunities for Ethereum to also do good from the network issue and to create sustainable, long-term value. The Ethereum platform enables the use of "smart contracts," which execute automatically based on terms written direct into the contract code.

The Ethereum network collects Ether from users in exchange for executing smart contracts. Smart contract engineering has meaning potential to disrupt massive industries such as real estate and banking and also to create entirely new markets.

Every bit the Ethereum platform becomes increasingly used worldwide, the Ether token increases in utility and value. Investors bullish on the long-term potential of the Ethereum platform can profit directly past owning Ether.

That'south not to say Ethereum doesn't have competition. A number of "Ethereum Killers," including Solana (CRYPTO:SOL), Polygon (CRYPTO:MATIC), and Avalanche (CRYPTO:AVAX), are all built to handle smart contracts and use a blockchain arrangement capable of processing more transactions per second. The speed has the added advantage of being less expensive for users every bit well. Simply Ethereum is the most broadly adopted platform for using smart contracts.

Should you invest in cryptocurrency?

Owning some cryptocurrency can increase your portfolio's diversification since cryptocurrencies such as Bitcoin have historically shown few price correlations with the U.S. stock market. If yous believe that cryptocurrency usage volition become increasingly widespread over time, and so it probably makes sense for you to buy some crypto directly equally part of a diversified portfolio. For every cryptocurrency that y'all invest in, exist sure to accept an investment thesis as to why that currency volition stand up the test of time. If you practise your enquiry and learn as much as possible most how to invest in cryptocurrency, you should be able to manage the investment risk equally office of your overall portfolio.

If ownership cryptocurrency seems too risky, you can consider other means to potentially turn a profit from the rise of cryptocurrencies. You can purchase the stocks of companies such as Coinbase, Block, and PayPal, or you tin can invest in an exchange like CME Group (NASDAQ:CME), which facilitates crypto futures trading. Although investments in these companies may be assisting, they do not have the same upside potential as investing in cryptocurrency directly.

Proficient Q&A

The Motley Fool sought blockchain insights from three finance experts: Dr. Christine Parlour, professor and Sylvan C. Coleman Chair of Finance and Accounting at the Haas Schoolhouse of Business, University of California, Berkeley; Dr. Jimmie Lenz, manager of Duke University's Master of Technology in FinTech and Master of Engineering in Cybersecurity; and Dr. Merav Ozair, who is a leading blockchain skillful and a FinTech Professor at Rutgers Business organization School.

The Motley Fool: What advice would yous requite to someone interested in investing in blockchain technology?

Dr. Christine Parlour, professor and Sylvan C. Coleman Chair of Finance and Accounting at the Haas School of Business, University of California, Berkeley.

Parlour:

Be curious but also be cautious. It is important to recognize that in that location is not a complete regulatory framework in this area. So, it is of import to do your homework. First, consider the venue that you use to admission the market place. In that location are regulated crypto exchanges and trading places; however, there are also unregulated ones. Second, while most tokens are based on open up-source lawmaking, it is not the case that they have the same disclosure regimes as blue chip stocks. Then, be careful and investigate the nature of the underlying token. Note that in other countries (Canada, Europe), at that place are ETFs and ETPs that track crypto portfolios; these have non received regulatory approval yet in the U.S. If and when they are offered to consumers, these volition be a low-cost way of accessing the crypto market, and so someone else will handle the market mechanics.

Dr. Jimmie Lenz, managing director of Duke Academy's Primary of Applied science in FinTech and Cybersecurity.

Lenz:

Learn and keep learning. The developments in the space are happening at a rapid pace, so much so that new noesis is being generated constantly. As a professor teaching blockchain, this is the hardest part, reinventing the class every semester, just information technology keeps my students and me as current as possible. This doesn't mean neglecting base cognition; having this is crucial, as well as some sense of the history to understand why developments have occurred at specific times.

Dr. Merav Ozair is a leading blockchain expert and a FinTech Professor at Rutgers Business School.

Ozair:

Blockchain technology is definitely the time to come. There is no escaping that. Even so, it is difficult to predict which projects will last and which will fail and be forgotten.

Most blockchain engineering companies are in their early, if non very early, stages. Hence, investing in companies utilizing blockchain technologies has nevertheless risks every bit investing in a start-upwardly. And like in whatever kickoff-upward, the gamble-advantage ratio is high.

Therefore, acquire nigh blockchain technology, do a thorough due diligence on any project -- from its applied science to business model to execution. Learn well-nigh the "trouble" it is trying to solve and what solution information technology's offering -- both from a technological perspective and a business concern perspective.

There'southward a lot of potential with blockchain applied science, simply the execution is in the details.

Source: https://www.fool.com/investing/stock-market/market-sectors/financials/cryptocurrency-stocks/is-cryptocurrency-good-investment/

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