Despite the rise in blockchain assets, 56% of American adults invested in the stock market in 2022. This number has remained steady over the last few years.
Blockchain assets are popular, but they aren’t the right choice for every investor. Assets come in different forms, but most of them are volatile.
So, how can you invest in blockchain? What are the pros and cons? Keep reading to find the answers you are looking for.
Can You Invest in Blockchain?
Blockchain is a popular technological advancement that powers cryptocurrencies like Bitcoin, Ethereum, and even altcoins. The technology tracks the creation and exchange of crypto and digital assets like it.
If you currently own cryptocurrencies, you are already investing in Blockchain! This is the most popular way to get involved in the technology.
If you aren’t currently investing in blockchain and would like to, follow these steps to jump on the bandwagon:
Choose Your Blockchain-Based Assets
Crypto is the most common blockchain asset, but there are alternative investments to look into. Research the various options to decide which fits your needs and financial goals.
Bitcoin and Ethereum are popular cryptos, but they are going to be more expensive because of the heightened demand.
You can also invest in over 6,000 different cryptocurrencies, such as Polkadot. View here for more about this altcoin. Typically, altcoins are less expensive investment options compared to Bitcoin.
NFTs (non-fungible tokens) are other assets on the blockchain making a wave.
After looking into the different assets, consider your investment goals and risk tolerance to make the right decision. You can always invest in more than one asset.
Choose an Exchange or Brokerage
Now that you’ve chosen an asset, you need to figure out where you can purchase that asset. Use a crypto exchange or brokerage where you can purchase, sell, and store your digital assets.
Coinbase is a common crypto exchange and Robinhood is one of the best brokerage firms. Each platform will have its own available assets and fee structures.
Fund Your Account
Now that you have an exchange or brokerage you feel comfortable with, make an account. You’ll need to then fund your account with fiat currency, such as U.S. dollars.
Depending on what the platform accepts, you can link your debit or credit card to the account. Some platforms allow you to use PayPal and other payment services.
Only fund your account with what you can afford. Don’t invest money that you can’t risk losing.
Buy Your Chosen Asset
After the deposit clears, you can instantly buy your chosen digital asset or assets. For any cryptocurrency available on the exchange, there should be a pricing amount and a buy button.
Store Your Assets
Most newbie investors choose to store their assets in the wallet hosted by their chosen exchange or brokerage. However, your investments are more secure in a wallet that is less accessible.
Hardware wallets that are offline are the most secure crypto wallets out there. If you are investing large amounts, consider the different types of wallets.
What Are the Risks?
Any investment comes with risks, and cryptocurrency investments are no different. Blockchain assets are risky and not suitable for every investor.
For example, Bitcoin alone is an extremely volatile cryptocurrency. Since becoming popularized, crypto has lost half of its value more than once.
Owning crypto is also risky because it’s possible that the government could make blockchain assets illegal. Although unlikely, it’s important to consider the restrictive regulations the government can impose.
For these reasons, don’t invest essential funds like your retirement or life savings into risky asset classes.
What Are the Pros?
When you invest in blockchain, there are risks, but there are some benefits you might experience. The most common pros are:
- Potential investment gains
- Distributed ledger security
- Decentralized finance features
In the coming years, some experts believe that blockchain assets might double in value. For investors, this is a potential moneymaking opportunity to consider if you can wait for long-term gains.
Another major pro of blockchain investments is that they use distributed ledger technology. This makes crypto and other assets extremely secure and hard to manipulate.
The blockchain also allows crypto assets to be directly exchanged from people across the world. Currently, there is no central governing authority or middleman in the United States.
What Are the Cons?
We’ve discussed the risks of investing in blockchain technology, but there are more cons than volatility.
For instance, if you utilize the blockchain to send crypto to the wrong wallet, it’s unlikely that you’ll be able to recover your funds. The same is true if your account gets hacked.
It’s possible to lose access to your wallet. You could forget the password to a software wallet and not be able to get back in. If you have a physical hardware wallet and lose it, you won’t see your digital assets again.
Ready to Invest in Blockchain?
There is more than one way to invest in blockchain, but buying cryptocurrencies is by far the most common. If you are interested in utilizing blockchain investments, crypto is going to be the easiest way to get started.
Cryptocurrencies are accessible to everyone, but you still need to understand the pros and cons of this investment. Once you have some money to play around with, you can follow the steps in this guide to start investing.
Want to learn more about cryptocurrency and technology? Check out the other topics on our blog.