Cryptocurrencies, or virtual currencies, are electronic peer-to-peer payment systems that operate independently of a government’s central bank. You can use these cryptocurrencies (Bitcoin and Ethereum) to purchase goods on the internet and in stores, while some accept it for services like web hosting.
Crypto trading is when you exchange your existing fiat currency (Dollar, Euro, Pound) to virtual currency like Bitcoins and profit from this process by selling and buying them at a reasonable time.
A new approach to investing with cryptocurrency trading is gaining favour among investors worldwide. You don’t have to buy Bitcoins; instead, invest in companies that mine for Bitcoins instead. Many traders search for different cryptocurrencies they can trade within Dubai, while some prefer investing in companies that mine for Bitcoins.
Pros
More companies are accepting it as a mode of payment
As more companies accept it as a mode of payment, more retailers will follow suit to ensure they don’t miss out on sales.
No transaction fees
There are no transaction fees when using cryptocurrencies like Bitcoins for trading purposes. All you need is a wallet to store your Bitcoins, while some wallets are physical devices while others are only apps or software that need installation on your computer or phone.
More people use it as their payment method of choice
The number of people who have started using cryptocurrency has increased over the years, and most prefer it over fiat currency because it is convenient and decentralised.
Higher returns than other forms of investments
Most currencies do not keep up with inflation but instead depreciate their value, making it an excellent time to invest in cryptocurrencies and other forms of virtual currency as the return on investment is much higher than that of other conventional investments.
You can trade it anywhere in the world
You can purchase Bitcoins from different exchanges worldwide and use them on websites that accept them without geographical limitations. All you need is a wallet to store your cryptocurrency of choice, while some prefer a physical device while others choose an app or software installation instead.
Cons
Difficult to invest if you’re a beginner
As cryptocurrencies are complex, it’s currently difficult for beginners with limited knowledge of them and trading to start investing in this field. While there are many online courses available today, they expect users already to have prior knowledge of trading or even programming languages; therefore, it won’t be suitable for everyone.
Volatility
Cryptocurrencies are very volatile, making them even less predictable than already volatile fiat currencies such as Dollars and Pounds. This factor alone could affect its value as not everyone will be willing to invest in such an unstable currency.
Not widely accepted yet
Although more companies accept cryptocurrency as a mode of payment, many still don’t accept it because of its volatility and lack of regulation. Investing your money only works when you can spend it somewhere else, and merchants need to accept it before this can happen.
Security issues
Because cryptocurrencies are decentralised, security becomes an issue as nobody can track down or freeze illegal transactions. Most traders store their Bitcoins on exchanges where some have been hacked successfully, which means your investment is at risk of theft, and you cannot do anything about it but wait for the thieves to cash out.
Blockchain is not always safe
Blockchain technology, which is what cryptocurrencies are built on, can be unreliable because of how complex it is to understand. Not all blocks in the chain have been verified, meaning they can be tampered with. There is also a risk of double-spending. You send your money twice or more, which is very unlikely in fiat currency transactions but is possible when dealing with cryptocurrencies.
Lack of regulation
At present, cryptocurrencies are not regulated, which means traders can easily manipulate their value. The lack of laws makes it even more complex for users to understand how to invest in cryptocurrencies.
High fees when transferring money abroad
When converting your virtual currency into fiat currency like Dollars or Pounds, you get hit by withdrawal fees around 5% and sometimes even higher depending on the withdrawal method you choose. It discourages many investors from using this currency to trade in.
