Some companies could see the latest craze of cryptocurrencies as a lucrative investment opportunity, but first they must make sure that they are aware of the potential risks of their investment and have done the appropriate research before making any kind of transaction.

Additionally, in order to increase the security level of investors, it is important that they use the most secure exchanges available and that two-factor authentication is enabled on all their accounts.

Cryptocurrency investments should be part of a diversified portfolio. However, you should align them with what you’re comfortable with, your financial goals, and how much time you have before achieving those goals.

Decentralization

Cryptocurrencies, in leveraging decentralised trust methods not reliant on centralised intermediaries, hence offer a banking and finance alternative to one that can’t see global collapses – like the one in 2008 – spearheaded by ‘cartels’ of large financial institutions.

The second property is that decentralised systems allow growth: they conventionally devolve authority to local communities that often can better take account of regional knowledge and quirks.

The note cautioned that cryptoassets are highly speculative and may experience ‘volatility’ – yet, at the same time, you should only invest what you can afford to lose. Investing, that is, in exchanges where prices can plummet just as quickly as they went up. This is why they add a disclaimer in smaller print to always do your research on any person or company before investing.

Privacy

Cryptocurrencies mint digital coins secured via cryptography and exchangeable among owners of digital wallets. Cryptocurrencies permit anonymous, secure transfer of money via distributed and tamper-proof blocks of transactions called blockchains, but became the subject of concern after amassing significant criminal activity and harvesting huge amounts of energy in the process of mining.

Not only are cryptocurrencies prone to extreme volatility that could lead to the annihilation of your investment, they are also susceptible to hacking attacks. They also fall outside of the existing frameworks of regulation: regulatory bodies struggle both to define what a cryptocurrency actually is and how to treat it. Cryptocurrency is thus a speculative investment with a potentially high reward. For some investors, this is an attraction.

Scalability

Digital currencies are a newdgling phenomenon. However, within their less than 10 years of existence, many have a scorching trajectory, soaring in valuation. When bought right, digital currencies can be hugest and not only that, many benefits accompany them such as, anonymity, decentralization, transparency.

But they can nonetheless be difficult to scale. Current digital cryptocurrencies such as Bitcoin require significant computational power to verify pending blocks, typically in giant warehouse farms drawing hundreds of megawatts of power, an activity increasingly centralised among giant firms that collectively generate billions of dollars a year in revenue.

Investors should think about scalability when choosing a coin to invest in. More important, investors should think about price volatility and the associated risks and decide; they should consider their targets, risk tolerance and all the usual considerations of investing in anything else.

Transparency

Cryptocurrencies are helping to spread economic development to global emerging markets with high inflation through financial inclusion activities such as Initial Coin Offerings and tokenisation, and easing access to capital for entrepreneurs through the tokenised offerings of ICOs.

Despite the allure of high returns with cryptocurrencies, investment delivers ‘high variability’ returns, exposing the potential for them wiping out investors’ entire accounts, since they are highly risky investments. Because of this, investors should treat them more along the lines of speculative stocks or other high-risk ventures, rather than essential components of one’s core financial portfolios or IRA or 401K investments.

But those that actually succeed tend to bring new and interesting ideas in blockchain technologies, or use-cases that leverage blockchain to solve real-life issues for the global world. Investing in such groundbreaking new projects will allow you to get in on the action, without necessarily going ‘all in’. Remember – investing is cryptocurrency is risky business!

Security

Deceptively modern (cryptocurrencies are underpinned by the latest in blockchain technology), even more deceptively unmodern (they commonly operate outside the financial system), the tendency of crypto currencies to epitomise gathering and tidying could not be transformed into the classic swindle; their highly volatile price histories and anonymous registries make them virtually impossible to trade properly.

Buying is also exciting: much depends on choosing the correct currency for investment, but the possibility of great gains is real.If investing, you should know that the price can fluctuate greatly, losses should be understood and accepted. As for selection, invest only as much as you are able to lose, try to understand the currencies you plan to invest in, and be careful not to be fooled by scams.

A lot of investors buy crypto with the expectation that its value will go up one day, and they can make a profit. But also, you know, crypto investments are very different from traditional assets such as stocks and gold – their lifespan is much shorter than, let’s say, your grandparents keeping their savings over decades in a regular bank account.