Have you heard of cryptocurrency, Bitcoin, or Ethereum, but you are not sure what it means? Here you can find useful information so that you can start with your own investment.
What it is?
Cryptocurrency is a digital or virtual currency that is getting more and more attention these days. It works on a decentralized system based on Blockchain; a digital ledger of transactions distributed across the entire network of computers. In other words, it is a system of information that is almost impossible to hack or change, which means that neither government nor any central authority can manipulate the flow of the currency. Thus, the price of any cryptocurrency cannot be manipulated.
The decentralization makes cryptocurrency more secure and faster compared to everyday currency. The huge advantage is that, when using cryptocurrency, you don't have to use lengthy bank transfers - the payment in crypto is way faster and secure. When using crypto as a payment method, you can receive or send a payment without revealing any sensitive information about you that someone could use against you. Thus, when correctly used, cryptocurrency is way safer, faster, and more secure.
How many cryptocurrencies exist?
There are many cryptocurrencies these days, more than 6700. The very first one was Bitcoin which remains the most popular and valuable cryptocurrency even these days. It was launched in January 2009 by an unknown man known by his pseudonym – Satoshi Nakamoto. In the past, Bitcoin was used mainly as a currency that should be safer, faster, and anonymous. However, there is only a limited amount of Bitcoin that can be mined. Thus, many people invest in Bitcoin and hold it in their portfolios.
Nowadays, there are plenty of other cryptocurrencies that emerged from the success of Bitcoin. Collectively we called them altcoins. Namely, there are Litecoin, Ethereum, Tether, etc. However, none of them has reached such a success as Bitcoin, although they may have the same qualities. They work on the same system - blockchain - although each of them can have a different set of rules (for example, the total amount that can be mined). Then, it’s up to everyone to choose the preferable crypto they want to own and believe in.
Is it safe?
It is important to bear in mind that cryptocurrency is not a usual investment. The investment is riskier. The point is that there is no generation of cash flow. Thus, to make a profit, you need someone to pay more for the currency than you did. Some experts claim that Bitcoin, for example, is not stable at all, and therefore, it can’t be seen as the currency of the future. Also, nowadays people prefer to hold it instead of buying with it. Another thing is that some states banned crypto or plan to put up taxes.
Cryptocurrencies are still very speculative, with both supporters and opponents. But the fact is that crypto is gaining popularity every day and more people make cryptocurrencies part of their portfolios. You should definitely consider this option as everyday money - fiat - loses its value and the amount you have today might rapidly decrease in few years.
