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Investing is one of the best things you can do to provide financial security for your future. One good reason to invest is so that you can retire comfortably and still have income. Another is to ensure you can provide for yourself and your life partner should something happen to either of you. But should you invest in cryptocurrency?

Obviously, there are many different kinds of investments you could make to grow wealth for your future goals. You could invest in real estate, bonds, stocks or any number of other things that grow in value over time.

However, in addition to these choices, there is another form of investing that is a relatively newer way to increase your wealth for the future. It is called cryptocurrency. But you may question whether or not you should invest in cryptocurrency.

What is Cryptocurrency?

You can’t hold cryptocurrency in your hand like you can other forms of currency. Cryptocurrency is encrypted currency that exists digitally. Since it can be found only on computers or the internet it is not possible to put it in your pocket, purse, or wallet.

Although digital currency is not illegal, it is also not considered legal tender in the U.S. as well as many other countries. This means it is not backed by the United States at this time.

Of course, that status could change in the future. But at this time it is considered a legal asset rather than actual currency or legal tender.

Why Cryptocurrency is Appealing

Clearly there are a lot of good reasons cryptocurrency could make an appealing investment choice. I will go over a few of them below.

In the past there have been many documented cases of people whose investments and entire life savings have been stolen by others. But cryptocurrency investments are a comparatively safer way to invest.

For one thing, forgery and theft of cryptocurrency is nearly impossible because of the encryption. In addition, transactions usually flow between two parties through blockchain technology without the need for any third party intervention.

Another positive it that cryptocurrency transactions do not require a bank to complete. This can speed up the length of time it takes for transactions to be completed. In fact, transactions made with cryptocurrency are nearly instantaneous.

Cryptocurrency is an appealing way for start-ups to fundraise. They would make an Initial Coin Offering, or ICO, allowing backers to purchase cryptocurrency with regular currency. This allows the start-up to get off the ground and the backers to receive a return on their investment in the future.

Why You Should be Cautious to Invest in Cryptocurrency

There are reasons why you should be cautious about investing in cryptocurrency. Legality, legitimacy and volatility are a couple of them.

As mentioned earlier, cryptocurrency is not illegal in most countries. But what happens if you invest in it and its classification changes making it illegal? It is possible the value of your investment could plummet causing you to lose thousands of dollars.

You must also be wary of investing through an ICO. For example, if you decide to invest in this manner, do some research beforehand. Make sure the company you are investing in is legitimate and not out to scam you through the sale of fake cryptocurrency.

Volatility of the values of cryptocurrency is another reason to be very careful with this type of investment. In the past few years alone there have been crazy changes in its value. While some people have made millions virtually overnight, others have lost thousands if not millions as well.

The past successes others have had in investing have proven it is a valuable way to secure your future. As to whether or not you should invest in cryptocurrency, only you can decide how much risk you are willing to take.