Should you invest in cryptocurrency? Consider these factors before going all in
Cryptocurrency has been all the rage in recent years, especially as Americans have tried to find nontraditional paths to financial stability in an increasingly volatile economy. (It’s a little scary out there nowadays!) But is crypto investing really the answer? The Sum takes a closer look and provides some tips.
TO SUM IT UP
- Around 31% of people ages 18-29 have invested in, traded or used crypto. But does that mean it’s a good investment?
- People have lost hundreds of thousands of dollars during pandemic-era crypto crashes with no way no way to hold exchanges accountable.
- By taking time to research cryptocurrencies and exchanges and proceeding cautiously, first-time investors can avoid a lot of issues down the line. Read on for some tips!
THE BACKGROUND
- Cryptocurrency is a digital asset that uses blockchain as a secure and decentralized “ledger” to confirm transactions.
- Crypto users don’t have to rely on banks or governments to “hold” those transactions, thus giving more autonomy.
- Instead, people “purchase” cryptocurrency through exchanges, which convert traditional currencies (such as the dollar) to digital versions.
INVESTMENT TIPS
- Consider investing conservatively in more reputable cryptocurrencies like Bitcoin or Ethereum to start. Experts recommend not investing more than 5% of your portfolio.
- Make sure you’ve securely saved your information to access your money. If you lose a password, it’s harder to access than with a traditional bank.
- If a particular cryptocurrency or exchange seems too good to be true, it likely is.
WHY IT MATTERS
- Crypto markets can often be just as volatile, if not more volatile, than traditional ones.
- Contrary to how some cryptocurrencies and exchanges market themselves, these investments don’t often allow investors to get rich quick.
- By taking time to research cryptocurrencies and exchanges before and proceeding cautiously, first-time investors can avoid a lot of issues down the line.
SOURCES
- Pew Research Center: 16% of Americans say they have ever invested in, traded or used cryptocurrency
- TIME: Should You Buy the Crypto Dip While Bitcoin and Ethereum Prices Are Down? Here’s What Experts Say
- CNBC: One in five adults has invested in, traded or used cryptocurrency, NBC News poll shows
- NerdWallet: Cryptocurrency: What It Is and How It Works
- Forbes: Crypto Crash: Is Now The Time To Buy The Dip?
- Brookings Institute: The future of crypto regulation: Highlights from the Brookings event
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The Sum breaks down complex economic issues and how they impact your life in just a few minutes a day. Follow thesum.news on Instagram for the full story.
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