Hello community! Just wanted to share my opinion and create a discussion on the subject matter.
Recently, I've invested a small sum into crypto. Even more recent, i had to liquidate for the purposes of paying off some of my consumer debt. This is what I've learned about crypto investing, at least for beginners.
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High volatility, high speculatory – As Im sure we all know, investing in crypto is quite risky. There's potential upside of capital gains if you sell high and at the right time, which we can all appreciate. But that upside comes with heavy price fluctuations and the potential downside of losing your investment (selling at a loss).
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Utility – Again, as a beginning investor, it was great to buy crypto and watch the ups and downs of price fluctuations, and watching the rallies. But aside from initial purchasing, and the ability to stake crypto for crypto rewards, there wasn't really much i could do with the digital coins. In terms of staking, the rewards output were quite low, and not always guaranteed. Granted, my investment was small, so it made sense that my stake holdings wouldn't generate high reward returns. The downside of staking? The processing time to unstake. It can be miserable when you're in the middle of the processing time, you see a rally occurring, and can't sell when your target price is hit.
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Benefits vs. Cost – network and gas fees. To illustrate, I've been using Coinbase as my holding and trading platform. To "trade" between the exchange and your digital wallet, the platform would take a "cut" to help movement of your crypto from exchange to wallet and back. Following reddit communities, I've learned it's not wise to hold crypto on the exchange. But trading between exchange and wallet can eat away your holdings over time.
There's also the fees of liquidation. When you sell your cryptocurrency, the platform will take a substantial cut which eats into any capital gains you may have earned. Not cool, but it's understandable. It's business.
- Cyberattacks and scams – this is where investing in crypto loses my interest. In my wallet, i "received" NFTs, aka "dust", that were potential scam attacks which would drain my crypto holdings if touched. Thankfully, the reddit community informed me what these were early on, so i didn't lose out on these scam attacks. But for them to appear in your wallet directly, it's a cause for high concern. Yes, there are scams that will try to steal your fiat currency when you have bank accounts, but luckily, those institutions have some firm of recourse, meaning if unauthorized transactions occur, there's plausibility of getting your money back. As far as i know, there's none of this when investing in crypto. If you lose crypto due to a scam, it's gone. No recourse.
Overall, investing in crypto is an interesting commodity to play with, but the hype of HODLing and waiting for huge rallies does not sit well with me when the commodities have no real end consumer utility, high fees for liquidation, and high potential cyberscam activities.
For me, cash is still king! 👑
