No matter how popular cryptocurrencies become among investors, they can’t succeed over the long term if they’re not widely accepted by merchants.

Cryptocurrencies can also be incredibly volatile, which adds to their risk. Bitcoin, for example, has lost more than 80{98cae0078f524eff3ab8ec32cf55b261677ef6c8a6ed6e94d92a4234b93f46b6} of its value in the past, and it’s experienced multiple significant falls over the past few months.

Volatility isn’t always a bad thing, but it can be tough to stomach as an investor. If you’re the risk-averse type, investing in cryptocurrency right now could lead to a lot of sleepless nights.

There are also risks involved in owning cryptocurrency itself. Buying cryptocurrency directly involves purchasing coins through a crypto exchange — not a traditional stock market exchange. You’ll also need a digital wallet to store your coins, which can be a security risk if you’re not careful. Wallets can be hacked, and if you lose your password, you have no way to access your investments.

Is cryptocurrency right for you?

Whether or not cryptocurrency is a smart investment for you will depend on your risk tolerance and your investing style.

Think about how you would react if your crypto investments fell by 20{98cae0078f524eff3ab8ec32cf55b261677ef6c8a6ed6e94d92a4234b93f46b6} overnight. What if they dropped by 50{98cae0078f524eff3ab8ec32cf55b261677ef6c8a6ed6e94d92a4234b93f46b6}? What about 80{98cae0078f524eff3ab8ec32cf55b261677ef6c8a6ed6e94d92a4234b93f46b6}? If you know you’d either lose sleep or panic-sell your investments in any of these scenarios, cryptocurrencies may not be the best fit for your investing style.

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