Cryptocurrency investment and trading have caused numerous discussions in the world of finance; many say it is a good investment though the same would argue the opposite. Doubts on cryptocurrency investment mostly arose from its volatility. You can’t really predict where it will go; will it cause you a great gain or give you a huge loss.
This article will introduce you to the pros and cons of both stablecoins and Bitcoins. To find out which will be a better investment for you, is it the answer to cryptocurrency volatility– the less volatile stablecoins or is it the original crypto–, the more profitable Bitcoin.
Before deciding which investment is better fitted to your financial status and your financial goals, you should be aware of the advantages and disadvantages of both stablecoins and Bitcoins.
So first, here are the factors which you have to consider before thinking of investing in stablecoins.
The Pros and Cons of Investing in Stablecoins
Experts say stablecoins became a popular investment option for it offers stability, thus the name stablecoins. It offers its investors little to no volatility. Crypto investors who doubt the effectiveness of Bitcoin since it is a highly volatile asset would go for stablecoins.
- Stablecoins are backed by stable assets.
Stablecoins are backed by assets with stable price value like USD and other fiat currency as well as gold; this means that you can have your stablecoins redeemed for its equal value of any of the two, whether USD or gold.
- No constant price fluctuations
Since stablecoins are designed to have little to no price fluctuations, you could expect its price to remain the same even after five years of obtaining it. It will protect you from the sudden crashes in the market value of other cryptocurrencies like Bitcoins and altcoins.
However, it could also be taken as a disadvantage as its price will remain the same even after years of you investing in it; thus, it will not give you the profit you could have if you decide to invest in Bitcoins.
- Lesser risk
Stablecoins’ stability is also the factor that gives it its lesser risk in investment market value. Lesser risks offered by stablecoins are also possible because it allows transparency to its investors and is protected by regular auditing. So investors who are afraid of the risks Bitcoins have, which they have expected to encounter from investing in it, will go for stablecoins. Though, the lesser risk would mean lesser profit.
If you want stability and want to avoid high-risk investments, investing in stablecoins is a good option for you.
Because there is also a long list of stablecoins that exists up to date, here is a list of the most popular types of stablecoins:
- Binance USD (BUSD) – launched in 2019, one of the dollar-backed stablecoins. One Binance USD is equal to one dollar.
- Tether (USDT) – Tether is anchored with US Dollar and is on a 1:1 ratio of USD, same with BUSD.
- Diem (formerly Libra) – Mark Zuckerberg launched this Facebook cryptocurrency which is a blockchain-based payment system that offers lower price money remittance through Facebook applications.
- Digix Gold – is backed by gold; this is launched to make gold divisible, transferable, and redeemable. One Digix is equivalent to the value of one gram of gold.
Now, for you to weigh your choices better, here are the factors you will have to consider when deciding to invest in Bitcoin.
- Higher profit gain
The reason why many investors believe that Bitcoin is a worthy investment is that Bitcoin offers a relatively higher profit gain despite its risks. Head over to the Bitcoin Superstar website for reliable, safe, and beginner-friendly software for trading crypto. When Bitcoin trading is done right, you could go up to double your investment. Though you have to keep in mind that a higher profit means a higher risk, so when investing in Bitcoin, be sure to invest what you can lose. Think of it this way, you want to invest $500 and get the best trade opportunity which might give you the best possible gain, but are you willing to lose $500?
- Level of control
Investing in Bitcoin means you have full control over your asset; you decide which trades will make you the best possible profit gain and where to buy and sell, and when to do it. Whereas stablecoins, which are backed by assets like USD or gold, will always be highly dependent on their price value; thus, you can’t really have control over the gains you will receive from investing in stablecoins.
- New opportunities and potential
Bitcoins still have a lot of potentials to improve, with growing numbers of Bitcoin trading platforms, the invention of new trading bots to assist trading, and the increasing number of investors and traders, as compared to the traditional assets which backed up stablecoins. Bitcoins volatility may mean higher risk, but it also means its unpredictability as well as its potential, which might result in new trade opportunities to make up higher profit gains.
If you want higher investment gain and you can tackle higher risk, go for Bitcoin investment and trading. On the other hand, if you want stability and you can go for long-term lower investment profit, go for stablecoins. Your decision must be based on your financial goals, so keep it in mind when deciding where to invest.
