What is cryptocurrency?
Cryptocurrency is a payment method that can be exchanged online for goods and services. Many companies have issued their own currencies, often referred to as tokens. These can be traded specifically for the good or service provided by the company. Think about them when you encode tokens or casino chips. You need to exchange real money for cryptocurrency to access goods or services.
Cryptocurrencies work using a technology called blockchain. Blockchain is a decentralized technology that pervades many computers that manage and record transactions. Part of the appeal of this technology is its security.
How many cryptocurrencies are there? What are they worth?
More than 6,700 different cryptocurrencies are traded publicly, according to the market research website CoinMarketCap.com. Encryption money continues to grow, raising money through initial coin offers or ICOs. According to CoinMarketCap, as of December 18, 2020, the total value of all cryptocurrencies exceeded $ 645.7 billion, and the total value of all the most popular digital currencies, Bitcoin, was about $ 421.7 billion. (You can check the current price to buy Bitcoin.)
Why are cryptocurrencies so popular?
- Cryptocurrencies appeal to their supporters for a variety of reasons. Here are some of the most popular:
- Supporters see cryptocurrencies like Bitcoin as the currency of the future and are tempted to buy them now.
- Some advocates like cryptocurrency removing central banks from managing the money supply, as over time these banks tend to devalue the currency through inflation.
- Other proponents of the technology behind cryptocurrencies, such as blockchain, may find it more secure than traditional payment methods because it is a decentralized processing and recording system.
- Some speculators prefer cryptocurrencies because they are overvalued and not interested in money.
Are Cryptocurrencies a Good Investment?
The value of cryptocurrencies can go up, but many investors see them as mere speculation, not real investment. reason? Unlike real money, cryptocurrencies do not generate cash flow, so in order for you to make a profit, someone has to pay more for the money than you do.
That is the “stupid” investment theory. Unlike a well-managed business, it increases its value over time by improving the profitability of the operation and cash flow.
According to the Nord Wallet authors, cryptocurrencies such as Bitcoin may not be as secure, and some prominent investors in the investment community are advised to stay away from them. Popular investor Warren Buffett has compared Bitcoin to paper checks. “It is a very effective way of transferring money and you can do it anonymously. A check is a form of money transfer. Are checks worth a lot of money? Is it because they can transfer money?
Those who see cryptocurrencies such as Bitcoin as the currency of the future should note that money requires stability so that traders and consumers can decide what is a fair price for the goods. Bitcoin and other cryptocurrencies have been stable for most of their history. For example, in December 2017, Bitcoin traded close to $ 20,000, down from $ 3,200 a year later. By December 2020, it was trading at record levels again.
This creates a price volatility phenomenon. If Bitcoin were to become more valuable in the future, people would be less likely to spend it and circulate it, making them less viable in cash. Why spend Bitcoin when it has three times the value next year?
How do I buy cryptocurrency?
Some cryptocurrencies, including Bitcoin, are available for purchase in US dollars, while others require you to pay with Bitcoin or other cryptocurrencies.
To buy cryptocurrencies, you need a “wallet”, an online application where you can keep your money. Usually, you create an exchange account, then you can transfer real money to buy cryptocurrencies like Bitcoin or Ethereum. Here is more information on how to invest in Bitcoin.
Coinbase is one of the most popular cryptocurrency exchanges where you can create a wallet and buy and sell Bitcoin and other cryptocurrencies. Also, more and more online brokers offer cryptocurrencies such as eToro, Tradestation and Sofi Active Investing. Robinhood offers free cryptocurrency trading (Robinhood has many cryptocurrencies, but not all, US).
Are cryptocurrencies legal?
Although China has banned their use, it ultimately depends on each country whether they are legal. Be sure to consider how to protect yourself from fraudsters who see cryptocurrencies as an opportunity to pay investors. As always, beware of the buyer.
How do I protect myself?
If you are looking to buy cryptocurrency from an ICO, read the good print that the company expects for this information:
- Who owns the company? A recognizable and well-known owner is a positive sign.
- Are there other major investors investing in it? If other public investors want some of the money, that’s a good sign.
- Do you have company shares or cash or tokens? This difference is important. Owning a post means you have the right to participate in its earnings (you are the owner), and to buy tokens means you have the right to use them as chips in a casino.
- Is the money already developed, or does the company hope to raise money to develop it? Further risks are reduced along with the product.
- It can do a great deal of work to filter through Propecia; The more details there are, the more likely it is to be legal. But even legitimacy does not mean that money will succeed. It is a completely separate issue and requires market knowledge.
- But beyond that, having a cryptocurrency exposes you to the risk of theft because hackers try to infiltrate the computer networks that maintain your assets. One high-level exchange declared bankrupt in 2014 after hackers stole hundreds of millions of dollars in bitcoin. They are not the typical risk for investing in stocks and funds on major U.S. exchanges.
So that’s what you have to say about this. Look at this and do the job properly. And because this is going to be very important for the future, you will definitely want to start earning a lot of money.
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