Cryptocurrencies are digital currencies that are used to buy goods and services online. You can trade, buy, sell and hold cryptocurrencies to get maximum profit. Cryptocurrencies use online ledgers with durable and sturdy cryptography to keeps the transactions safe and secure. In this article, we will discuss what cryptocurrency really is, how it works, and how to invest in it safely.
What is cryptocurrency?
Cryptocurrencies are the digital form of money, in simpler words. You can use this form of payment for buying and selling goods and services online. There are many types of cryptocurrencies that are available online today. As crypto space is becoming more and more popular day by day, it is making progress rapidly. Many companies are operating their own cryptocurrencies which are also known as tokens. Blockchain is the technology that cryptocurrencies use. It is the decentralized finance systems that make cryptocurrencies unique and distinctive from fiat currencies.
How many cryptocurrencies are available?
Almost over 6,700 digital currencies known as “cryptocurrencies” are available online today. According to CoinMarketCap.com, these cryptocurrencies are being traded publically and people are getting profits on a daily basis. “The total value of all cryptocurrencies on Jan. 27, 2021, was more than $897.3 billion”, states CoinMarketCap in an article, “and the total value of all bitcoins, the most popular digital currency, was pegged at about $563.8 billion.”
The reason behind the popularity of cryptocurrencies:
The following are the main reasons behind the popularity of cryptocurrencies:
- The crypto enthusiasts and experts believe that “cryptocurrency is the future”, they believe in decentralized finance and digital money. So they are actively indulged in buying and trading cryptocurrencies before they become more valuable.
- The decentralized factor of cryptocurrencies is one of the major reasons behind the popularity of crypto. The central banks do not have any authority over crypto, because of which the experts believe that inflation can be reduced.
- The blockchain technology that is the support behind most cryptocurrencies is way safer than payment methods existing worldwide today.
How to Invest in Cryptocurrencies?
Cryptocurrency exchanges are used to buy, sell, trade, and store cryptocurrencies. There are many cryptocurrency exchanges working today, where users can buy, sell or trade cryptocurrencies like Bitcoin. Ethereum, Litecoin, etc. Many famous exchanges include Bitfinex, Coinbase, GDAx. If you want to buy popular currencies like Bitcoin, you do not even need to have millions of dollars because these exchanges allow you to buy only a fraction of the cryptocurrency as well.
To buy cryptocurrency, it is important that you have a “wallet”, a digital form of a real wallet that is needed to store your cryptocurrency. These exchanges have made it really easy to invest and buy cryptocurrencies. You just have to make an account and then transfer real money to buy cryptocurrencies. For example, On CoinBase you can create an account easily and then you can sell, buy or hold your cryptocurrency after making a wallet on the very same exchange just in a few clicks. Moreover, the purchase can be done through a debit card. However, these exchanges charge a particular fee on every transaction made. But if you are looking to buy some altcoins, you will have to trade it for some other cryptocurrency as Altcoins cannot be bought through paper money or fiat money as they call it.
Bitcoin also offers “Bitcoin ATM” which is located in more than 76 countries; it provides added ease of security and is less complex. You can use Bitcoin ATMs to simply buy a cryptocurrency and you can simply send it to your wallet.
Are Cryptocurrencies a decent investment?
Cryptocurrency is been called a bubble, which may pop anytime. It is highly volatile and there are risks, for sure.
“For those who see cryptocurrencies such as bitcoin as the currency of the future, it should be noted that a currency needs stability.” While cryptocurrency history shows that it has not been stable at any time. Some people have a very strong argument against the ongoing cryptocurrency haul that is taking the whole financial world in its power. Warren Buffett states that “It’s a very effective way of transmitting money and you can do it anonymously and all that. A check is a way of transmitting money too. Are checks worth a whole lot of money? Just because they can transmit money?”
However, from the last year, cryptocurrencies have been doing exceptionally well in the market and it is said that it will keep on surging to new levels. That is why people are getting maximum profit from it nowadays and are determined to get more from it in the coming years.
Also, Bitcoin has now been here from a decade ago, people never thought it could make this long but yes it is here. And it is increasing in its value day by day. And it is expected that it will gain immense value in the future too. Nonetheless, you should be responsible enough not to risk your whole lot of money on the success of cryptocurrency as this volatile market can crash at any time.
Some important guidelines for safe investment:
- Putting resources into cryptographic forms of money can be a fascinating possibility for a segment of your portfolio; however, you should try to broaden your speculations with different properties. A decent monetary council can exhort you on a proper resource portion, and most will even put away your cash for you.
- You need to carry out complete and deep research before investing in cryptocurrencies. You are responsible for your own money.
- Proportion your money on more than one coin, if one crashes you may have other options as well.
- Never invest in cryptocurrencies based on the hype people create over social media.
- You need to understand your strength and weaknesses, always invest the money that you can take a risk to lose.
- Although it has grown largely throughout the year 2020, Bitcoin still has a chance of failure. “The entire cryptocurrency market is a bubble,” states Robert R. Johnson, at Creighton University. You should keep this in your mind.