Undoubtedly, the development of technologies like Artificial Intelligence, Machine Learning and Blockchain are paving out the way for the future. And nothing has more obviously changed today, than cryptocurrency and blockchain technology.
The first term refers to a special kind of digital currency that has the potential to create massive returns on investments, the second one encompasses the global network of computers that combinedly manage the database where the transactions of such currencies are recorded.
In this article, I will focus on the pros and cons of these two marvelous innovations of the new era, since all of us who deal with finances –whether personally or professionally– know very well what these modern inventions actually are. So, I thought it would be rather interesting to know the advantages and disadvantages of investing in cryptocurrency and blockchain technology.
Pros of investing in Cryptocurrency:
- Time horizon is shorter
To begin with, it is a much less risky investment compared to angel investing and venture capital investing.
Just a couple months ago, in October 2017, Datum launched their ICO (Initial Coin Offering) and it has already raised a huge amount of $1.5 million USD in the pre-ICO funds.
Moreover, since cryptocurrencies are network-based, investors know they’ll be able to cash out their investments way faster.
- An easy way to earn huge returns
Why do investors like to venture into cryptocurrencies so much?
Simply put, if you would’ve invested $1000 USD in Bitcoin in 2013, today it would be worth more than $400,000 USD…
- Enhanced liquidity
If you choose to buy equity shares from a startup to earn a profit, you have to look for someone interested in buying those shares or wait for an acquisition to take place. In both cases, you’ll never know when you will end up cashing out your investment.
Cryptocurrency offers high liquidity and can even be sold for ether or dollars. Also, ICOs can construct a highly solid network, take Datum’s network of 56,000 members, for example.
Cons of investing in cryptocurrency:
- Shortage of resources
The cryptocurrency’s ICOs are just like startups, if they run out of resources or don’t raise enough money, they become unable to continue operations.
- Higher chance of mismanagement
It definitely needs a strong founding team for any cryptocurrency to navigate from the ICO phase to mass-market levels. So, if the team is not perfectly organized and qualified, they could mismanage the money and not use it wisely.
- It’s highly volatile
It’s similar to investing in the stock market or real estate, you never know what’s going to happen. Hacking episodes could occur and make all investors lose all of their money. Though such worst-case scenarios are not common, there have been sudden drops in the ICO’s value.
Pros of blockchain technology:
One of the major perks of blockchain technology is that its database can be accessed without the need for a third party or a manager. And the transactions made through blockchain have their own validations and means of authorization. Verifying transactions independently is something that can be easily done with blockchain.
- Excellent data quality
The data available in blockchain is extremely secure. Besides, it’s perfectly timely, consistent and available at all times.
- High durability, reliability, and longevity
Blockchain has a decentralized network, so it doesn’t depend on any control center, making it far more resistant to threats and hazardous events.
Cons of blockchain technology:
- Poor performance
Due to the nature of blockchain, it can be slower than centralized databases.
This is because, with every transaction, blockchain has to carry out everything all the other databases do, plus two extra burdens: signature verification and redundancy.
- Regulation is uncertain
As modern currencies tend to be created and regulated by national governments, it’s hard for blockchain and bitcoin to become widely accepted, thus, the government regulation status of both of them remains unsettled.
- High cost
Although blockchain can eventually save you lots of time and money, the initial cost seems to be surprisingly high.
And that’s it. These were the pros and cons of blockchain and cryptocurrency!
So, if you are all about innovation and the technologies that are building tomorrow, today; these are other related articles that you may like:
- What is Artificial Intelligence? Here’s a guide will all you wanted to know
- 10 Artificial Intelligence Technologies That’ll Rule 2018
- What is Machine Learning? [INFOGRAPHIC]
- The Beginner’s Guide To Machine Learning
Now you know, before you invest on cryptocurrency or if you plan to use blockchain technology anytime near the future, keep in mind these advantages and disadvantages to make an informed decision.
Investing in Cryptocurrency and Blockchain Technology: Know the Pros and Cons!