In recent years, cryptocurrencies have dominated the market primarily because of their unprecedented growth. Potential investors are now considering them as an option for financial success as, in the past, they did yield lucrative returns for several people. Though cryptocurrency investments are attractive, monetary experts caution people not to jump into them without sound financial knowledge about what they actually are and how they work.
Kavan Choksi– an overview of cryptocurrency investments for beginners
Business and financial expert Kavan Choksi recommends people to first understand the asset classes they are keen to invest in. Financial success comes with knowledge, and this is why one should always consult a skilled and experienced financial advisor for the task. When it comes to cryptocurrency investments, they have their pros and cons, like stocks, bonds, gold, etc. It is prudent for one first to understand what cryptocurrency is and how it can be optimized for financial wealth building.
Digital currency free from government control
Cryptocurrencies are digital in nature; in other words, they are virtually in the heart and do not have a physical form, unlike fiat money. Bitcoin was the first cryptocurrency that entered the world, and after that, others followed suit. Cryptocurrencies are decentralized in nature, and this means they are not subject to the control of the government. You can store your coins in mobile wallets and use them for the purchase of goods and services.
An overview of the blockchain technology
Cryptocurrencies operate on a unique technology known as the blockchain. It is a type of digital ledger for cryptocurrency transactions that are secure in nature. The goal of the blockchain is to verify the transactions executed across the world.
Cryptocurrencies are created via a process known as mining. In this process, miners solve complex problems in math, and they are rewarded with new cryptocurrencies for their success. Investing in crypto coins is not the same as stocks or government bonds. In this case, you are not buying a share in an organization. Instead, you are purchasing digital tokens virtually. They can be used for the purchase of goods and services in the market.
Do they have investment risks?
Like their peers in the market, cryptocurrencies also have investment risks. Business expert Kavan Choksi is cautious that you must be prudent with cryptocurrency investments as they are highly volatile in the market. For example, in 2017, Bitcoin had a price swing of more than $1000 in just some days. You should be careful with your investments with it as there is a potential of losing a lot of money in just a few days.
He recommends that you should invest a small part of your income in them, subject to the guidance of a skilled financial advisor. With the aid of an experienced advisor, you are able to understand the market better. You will also get financial education and knowledge as to how cryptocurrencies and other asset classes work. Moreover, you can get an insight into your risk tolerance and how much you can afford to lose in case the performance of the asset is not good in the market. With this knowledge, you can safely invest in crypto coins and prevent huge losses.