What You Need to Know About Investing in Bitcoin, Ethereum and Cryptocurrency

If you've been thinking about investing in bitcoin, Ethereum or any other cryptocurrency, you need to understand the risks and rewards. Here's what you need to know.

Cryptocurrencies are digital or virtual tokens that use cryptography to secure their transactions and to control the creation of new units. Bitcoin, the first and most well-known cryptocurrency, was created in 2009. Ethereum, launched in 2015, is the second-largest cryptocurrency after Bitcoin. Cryptocurrencies are often traded on decentralized exchanges and can also be used to purchase goods and services.

Why invest in cryptocurrencies?

There are several reasons why investors might want to consider investing in cryptocurrencies.

Cryptocurrencies are decentralized, meaning they are not subject to government or financial institution control.

Cryptocurrencies are global, meaning they can be traded 24 hours a day, 7 days a week.

Cryptocurrencies are digital, meaning they can be stored and transferred electronically.

Cryptocurrencies are often traded on decentralized exchanges, which can provide investors with increased privacy and security.

Cryptocurrencies are often used to purchase goods and services.

What are the risks of investing in cryptocurrencies?

Like any investment, there are risks associated with investing in cryptocurrencies.

Cryptocurrencies are highly volatile. The value of Bitcoin, for example, has ranged from a high of $19,783 in December 2017 to a low of $3,194 in January 2018.

Cryptocurrencies are relatively new and unproven. There is no guarantee that they will continue to be valuable.

Cryptocurrencies are often targeted by hackers. In January 2018, for example, $530 million worth of Ethereum was stolen by hackers.

Cryptocurrencies are often used for illicit activities, such as money laundering and drug trafficking.

How can I invest in cryptocurrencies?

There are several ways to invest in cryptocurrencies.

Buy cryptocurrency coins or tokens on a decentralized exchange.

Buy cryptocurrency coins or tokens through a cryptocurrency broker or dealer.

Use a cryptocurrency wallet to store your coins or tokens.

What are the pros and cons of investing in cryptocurrencies?

The pros and cons of investing in cryptocurrencies depend on your individual circumstances. Here are some things to consider.

Pros

Cryptocurrencies are decentralized and global, meaning they can be traded 24 hours a day, 7 days a week.

Cryptocurrencies are digital, meaning they can be stored and transferred electronically.

Cryptocurrencies are often traded on decentralized exchanges, which can provide investors with increased privacy and security.

Cryptocurrencies are often used to purchase goods and services.

Cons

Cryptocurrencies are highly volatile. The value of Bitcoin, for example, has ranged from a high of $19,783 in December 2017 to a low of $3,194 in January 2018.

Cryptocurrencies are relatively new and unproven. There is no guarantee that they will continue to be valuable.

Cryptocurrencies are often targeted by hackers. In January 2018, for example, $530 million worth of Ethereum was stolen by hackers.

Cryptocurrencies are often used for illicit activities, such as money laundering and drug trafficking.

Before investing in cryptocurrencies, be sure to understand the risks and rewards. Consult a financial advisor if you have any questions.