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The popularity of cryptocurrency is growing rapidly as people’s interest in digital currency is increasing. Many people have started to invest in digital currency and have also started to use it as a medium of exchange. And with time new cryptocurrencies are coming to the market. Let us see what are the pros and cons of new cryptocurrencies to invest in 2021.
Pros And Cons of New Cryptocurrencies To Invest
Everything on this earth is like a coin that has two sides: the pros and cons. One cannot ignore either one as both are intermingled. Here are pros and cons of new cryptocurrencies to invest for 2021.
Pros
Huge Future For Returns
One of the most important demographics that allows everyone in new cryptocurrencies to invest is the fact that $1,000 invested in Bitcoin in 2013 would be worth more than $400,000 today. Recent ICOs have formulated a number of massive returns in a short span of time. Stratis invested $600,000 during their ICO in 2016 June and has witnessed a 63,000 per cent hike in the valuation. Specter coin invested $12,000 in 2017 January and has witnessed a hike of more than 13,000 per cent.
Increase In Liquidity
When someone buys equity in a startup, in order to gain a profit, they need to find someone who will buy the equity from the startup. If that is not the scenario then they can wait for an acquisition or IPO to occur. But none of these options enable the user to control when they wish to cash out their investment.
If a digital currency ICO can build a solid network, for example, the “56,000 member Datum network”, then the investors at once have much more liquidity in their hands. With that, they can sell their cryptocurrency for dollars or even ethers right away.
There Is A Clear Direction For Execution
The biggest pros of investing in new cryptocurrency ICOs more than in startups is the idea that startups often need to revolve multiple times and overcome commencing speed fluctuations. When someone sees a set of formulators asking for the beginning capital, then one should realize that the company they initially take public will look completely different. With a digital currency ICO, when someone invests they know exactly what the platform does and will continue to do.
Have Shooter Horizon Of Time
Since investments in cryptocurrency are subject to market risk, it is always best to evaluate them in “angel investing” and “venture capital investing”. In late October 2017, Datum launched their ICO that had already raised $1.5 million in pre-ICO funds.
Since digital currencies are based on networks and Datum has already received immense support, investors now know that they can begin cashing out their investments relatively fast.
Cons
Increased Fluctuations
Obviously, when we compare new cryptocurrencies to invest and investing in the stock market, cryptocurrency ICOs fluctuate more often in new cryptocurrency than the latter. Problems such as hacking can create investors to lose all of their digital currencies invested quickly. Though such extreme incidents are rare, major fluctuations in ICO value are not something that can be ignored.
Potential Network Stall
The real value of any digital currency lies in formulating a strong outcome that a significant platform of users will want to use. Although these networks either fail to pull users or never get users to actually use the platform, then the valuation of the currency is likely to see a drop. Many of the recent ICOs that could not perform well after launching did so due to a lack of platform engagement.
Probable Shortage Of Resource
Just like startups can run out of resources and be not able to continue their operations, if new cryptocurrencies ICO is not able to raise enough money or the startup spends more money than it should, the doors shut down and the network really closes. Many new cryptocurrencies are performing a pre-ICO raising so that they can have firm commitments of resources and exhibit demand for the digital currency.
Probable Mismanagement
In the end, every new cryptocurrency are a startup and has a group of founders operating it. In order for the digital currency to effectively direct from the ICO phase to the “mass-market levels”, it requires a solid founding batch. Before deciding on new cryptocurrencies to invest in ICO, make sure to look into the company’s background and compare whether they have the skill sets to perform the project.
Opinion
After evaluating the pros and cons of new cryptocurrencies to invest in, it can be concluded that it is not a bad idea to invest in a new digital currency. Yes there are risks but investment as a whole is subject to market risk.
Conclusion
In the modern market, new digital currency offers many advantages that are missing in venture capital. When someone starts thinking about new cryptocurrencies to invest in, he/she should take time to evaluate what ICOs are available and how their winning might be able to generate huge returns for them.
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