By Amie Parnaby
“Bitcoin [cryptocurrency] is the beginning of something great: a currency without a government, something necessary and imperative.” – Nassim Taleb
The rapid growth in the Bitcoin price in 2017 has propelled Bitcoin, and cryptocurrencies in general, into the global public’s eye. However, it hasn’t all been good news, which begs the question of whether traders should risk investing in cryptocurrencies or not. Even though this statement might sound negative, we believe that, as the quotation by Nassim Taleb states, cryptocurrencies are a vital step forward in the digitisation of our global economy.
On the one hand, naysayers have questioned the longevity and viability of the cryptocurrency industry. Furthermore, they predicted that the rampantly increasing Bitcoin price was merely a bubble which would burst and wipe out the profits made by investors, leaving them with massive losses.
The risks involved in cryptocurrency trading have prompted several governments like Bangladesh, Morocco, and Nepal to ban the buying and selling of any of the cryptocurrencies. While other countries such as China have not prohibited cryptocurrencies, they have cracked down on the digital currency industry, making it very difficult to trade in any one of the cryptocurrencies, including Bitcoin.
Furthermore, Initial Coin Offerings (ICO), or new coin forks, are coming under increasing scrutiny by global financial regulators because of the high risk to which investors are exposed.
On the other hand, the cryptocurrency industry seems to be shaking off the aftereffects of the negativity and the inevitable regulation by the global financial regulatory bodies. In fact, the Bitcoin price reached $10 000 at the end of November 2017. Moreover, there is growing adoption of cryptocurrency funds in the mainstream financial markets.
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According to the research firm Autonomous Next, there are more than 120 funds that are focusing on cryptocurrencies, including hedge funds. Finally, the Chicago CBOE opened a Bitcoin futures exchange in December 2017.
The closest we can reach to a conclusion is thus; while investing in cryptocurrency can be considered a risky venture, the investor’s exposure to that risk can and should be mitigated by intelligent investing.
After considering deciding to invest in cryptocurrency, the subsequent question should be; After Bitcoin, which are the next best digital currencies in which to invest?
In response to this question here is a list of the most popular, and viable, currencies in which you may consider investing:
Ethereum: Not only is Ethereum (or Ether) the second most popular digital currency that has captured the imagination of both investors and miners, it is also the second largest currency available by market cap. The reason it is gaining in popularity, especially amongst cryptocurrency miners, is that is becoming increasingly difficult to solve the Bitcoin hash-algorithms. This is because there is a finite number of Bitcoins that can be generated and miners are reaching that figure. Ether is also more reasonably-priced than Bitcoin, so there is a more significant potential for growth when trading in Ether.
Bitcoin cash: Bitcoin cash is a Bitcoin fork which has a greater block size (8mb limit) which allows miners to process more payments per second. The faster payment process leads to a better user experience it offers better protection from having your investment wiped out due to fraudulent activities.
Litecoin: Litecoin is also a Bitcoin fork, and it is currently the fourth largest digital currency. The main selling point is that the Litecoin infrastructure can solve some of the issues faced by the Bitcoin mining and trading infrastructure.
About the Author:
Amie Parnaby is a professional writer with experience in a broad range of industries, from I.T to training, from optics to banking. Within these settings, Amie has provided quality web content, training materials and technical documentation. She is currently an in-house Content Writer at Leverate.