Cryptocurrency has been a major topic in the investment community as of recently and there is much conversation on whether this is suitable for investment. But there are many who are skeptical of this newly emerging market for several reasons drawing them to the question of whether this is strategic investment or sheer gambling.There are several advantages of cryptocurrencies; primarily that they are independent from political influence and save user from the barriers of international trade such as currency exchange. The borderless nature of the currency has made it one of its most versatile assets.
Another advantage of the currency is that it is electronic and therefore incorporates all of the advantages of electronic currency such as those associated with credit and debit cards; primarily that they are used instead of carrying cash around and make for a smoother and cleaner transaction. These are among the various advantages of cryptocurrency.
But there are also significant risks that exist in the context of cryptocurrency and these include government regulation and security. Cryptocurrency may be free from regulation as far as supply and interest rates, but it certainly is not independent should the government decide to ban use of these currencies within their own borders barring constitutional issues. Therefore, there is a significant risk to the value of the currency with regards to government regulation on its usage within its jurisdiction.
Another substantial risk associated with cryptocurrency is security. If hackers were to infiltrate the system of a cryptocurrency and merely delete or rearrange the information as to who has how much of the currency, this can cause substantial problems and diminish the integrity of the system which can have critical consequences for the brand. This is another risk to the cryptocurrency market.
So the question remains; is cryptocurrency a strategic investment or gambling. The answer; isn’t all investing?
Generally speaking, even investing in the strongest market or exchange can lead to an unexpected crash and loss of money. This is the gambling element of investment.
But the strategic element to investment involves assessing the circumstances of the investment and making a determination based on critical thinking as to whether the investment, whether in stocks, currency, or in this case, cryptocurrency, will likely be successful or not.
It is not easy to make that determination which is why all major exchange brokers place a clear warning on their site indicating that there is a significant risk associated with trading. Not all people can be successful in trading; but for some people the success can be substantial.
Strategic thinking and careful decision making are what separate investment from gambling, but they do share many similarities. And in many cases, the greater potential reward, the greater the risk; which is also similar to gambling.With regards to cryptocurrency, the case is the same. This emerging market presents a lucrative opportunity for growth. However, the security and political risks are significant. Maybe cryptocurrency is a great idea; but if governments find it undervalues their own currency and effectively ban them as a result, their value will undoubtedly plummet. But there is no news as of now that such a policy implementation is coming. Therefore, the cryptocurrency market seems to be stable for the time being.
These are the types of reasonable analyses that are associated with strategic investment that make it somewhat less than gambling. Is it certain? Certainly not; just like anything else. There is a risk associated with opening a restaurant just like there is a risk in investing in a stock or even a house. But investors make sure they assess all of the details associated with the investment specifically before they come to a final decision whether they will make a particular investment or not and that is the exclusive difference between strategic investment and random gambling such as throwing a dice.
Is the cryptocurrency market gambling? To a certain extent, yet. But at the same time, assessing the details of the market and its expected direction in the time to come based on certain facts makes it slightly less unpredictable than pure gambling; although it remains significantly risky nonetheless. It will be interesting to see how the market continues to develop in the time to come.