Cryptocurrency has taken the world by storm, slowly but surely rising to prominence. Today, everyone wants to know what it is, how beneficial it is and how safe trading in it is for them.
Cryptocurrency is digital. It cannot be seen or felt but you can use it to buy different services and even goods online. It uses a cryptography-protected ledger online to secure these transactions between parties.
It uses blockchains which are decentralized and spread across different computers all over the world. These record and manage transactions that occur online using cryptocurrency.
What this means is that there is no central server or body regulating the currency and this is one of its appeals. Besides, the fact that different computers manage and record makes it secure.
Different Cryptocurrencies and their Worth
Presently, there are over 6,700 cryptocurrencies and they continue to increase and spread rapidly. They raise their value by initial coin offerings. As of April 2021, the value of every single cryptocurrency came to over $2.2 trillion. The most valuable of them all, which is Bitcoin, came to $1.2 trillion.
Other popular currencies include:
You can click here to read and learn more about cryptocurrency.
Why Cryptocurrency Is Popular
There are numerous reasons why the currency is popular among buyers and users. But some of the popular reasons include:
The decentralized blockchain technology that drives the currency is an attraction to many. This is because it is secure – there is no central body or system controlling everything. And it cannot be easily hacked.
Some buyers and users like that there is no financial body controlling the flow or trade of the currency. Therefore, inflation, which reduces the value of the currency, is less likely to occur.
Some interests hinge purely on financial value. Cryptocurrency is growing in value every day and some users are looking to cash out massively when they get to a peak.
Many see them as the future of money and trading. Therefore, there is a rush to buy as many as possible, especially in Bitcoin, before they get too expensive.
Should You Invest in the Currency?
The value of cryptocurrency may rise and it may fall. In fact, Bitcoin particularly has done so a few years ago, plummeting to less than $3,500 from a point of almost $20,000.
Some investors see the purported value of these currencies as only speculations, driven by rumors. In fact, many don’t see them as investments that are real.
Their reason for saying this is that the currencies do not generate any flow of cash. So for anyone to make a profit out of it, they have to find a buyer willing to pay a higher amount than they did while buying it in the first place. This is the theory of ‘the greater fool’ investment.
In other words, the currency has no stability. It is purely dependent on who is selling and who is buying, as of today.
Worthy of note is that famous billionaire and investor, Warren Buffet, compared the currency, Bitcoin in particular, to checks.
He said that Bitcoin is an effective way of sending money, considering that you can do this without anyone knowing who you are. But so is a check. So because a check can send money from one point to another, does that make it worth a lot of money?
In effect, he is saying that no investor should invest in the currency just because of what it’s worth. It has no stability or solid foundation; it can vanish in a twinkle of an eye.
The stability of a currency helps buyers and sellers decide what price is fair for any good or service. But cryptocurrency of any type has offered nothing like stability in the years of its existence, with prices fluctuating ever so frequently.
The volatility of the price is a risk. If one bitcoin, for instance, can go up to $20,000, owners would be reluctant to sell. They may want to hold on to their coins and see how much higher the prices go.
As a result, there will be fewer coins in circulation, making it difficult to trade with them and further reducing their chances of becoming viable currency options.
Click https://www.cnbc.com/2021/05/07/bank-of-englands-bailey-crypto-investors-risk-losing-all-their-money.html to read more on the value of cryptocurrency, from experts.
Some countries, such as the U.S, have made cryptocurrency legal. But some others, such as China, has banned its use. Therefore, there is no universal acceptance yet of the currencies. You will have to find out how the law in your country views them.
Protection from Fraudsters
As with everything else, cryptocurrencies are an opportunity for fraudsters to defraud new investors or buyers. So it is important to know how to protect yourself, especially if you are new to it.
If you find a company or organization trading in cryptocurrency, be sure to read all the terms and conditions written in fine print. Make sure they answer the following questions satisfactorily:
- Who owns or runs the organization? If you are well-versed in reputable and reliable traders, you will be able to tell if this is one of them. But if you are not sure, you can visit any of the known agents and verify.
- What is your stake in the organization? If you are going to be getting only the tokens or currencies you pay for, the only perk is that you can use them when you want. But if you have a stake, you become a part of its earnings. Be sure to ascertain if this is applicable.
- Who else is investing in the currency? If well-known and reliable investors, like Warren Buffet, are putting their money and reputation into it, you know it is the way to go.
- How developed is the currency? The more developed and known the currency of choice is, the less the risk of investing in it. Otherwise, the organization may just be developing their own coin and is looking for money to push it further along.
Before you begin to invest, you can read article from sites like metal-res.com crypto buyer’s guide to know exactly how to go about it.
Cryptocurrency is all the rave now. But nobody is sure whether or not it will hold in the next year, considering how much its price keeps rising and falling.
However, if you are willing to take the leap, it could be a worthy investment. You can sell when the price is much higher than the buying price, but many are holding for the long term.