Cryptocurrencies are seeing a massive surge in popularity. In contrast, they used to attract a niche audience just a few years ago. Today, everyone and their grandmother want to learn how to invest in Cryptocurrencies. You probably can’t avoid seeing a news article about the latest Bitcoin price or stumbling upon investment advice on social media.
What is Cryptocurrency?
Cryptocurrency is a broad term for digital assets with verified transactions and records maintained by a decentralized blockchain system using cryptography. Hence, rather than a centralized authority like a Visa credit card or a bank.
What Makes Cryptocurrencies Different From Fiat Money?
Fiat money — like the American (USD) or Canadian (CAD) dollar — issued by the government. It means a central authority controls its value, interest rates, and supply (how much is in circulation). Many view this government involvement in the mechanics of the free market as manipulation. Therefore, as an archaic (and futile) attempt to manage a vast and complex economic system. At best, a noble intention, a catalyst of hyperinflation that makes wealth building very difficult for the average person at worst.
On the other hand, cryptocurrencies decentralize — all transactions are done peer-to-peer or through smart contracts, and there’s no authority overseeing them. Many people consider this a massive advantage over traditional money because it gives them complete control of their assets.
How Do Cryptocurrencies Work?
When a new cryptocurrency transaction occurs. Adding to a digital ledger of all other transactions on a decentralized network of computers called the blockchain. Computers or ‘nodes’ of blockchain can have varying degrees of centralization and decentralization and can be spread worldwide. Before, It could add a new transaction to the blockchain. These nodes check the new data to add or ‘block’ against each other’s records to verify it.
This makes the blockchain incredibly secure and virtually impossible to hack. Suppose someone wanted to fake a transaction. They’d need to hack 51% of the nodes in a network, which would be incredibly time-consuming and expensive to be worth it.
Investing in Cryptocurrency
Before we dive into how to invest in cryptocurrency. It’s important to understand that there are good reasons to get involved, and there are poor ones. Remember that for every person who made an overnight fortune trading Bitcoin, there is someone who lost their entire life’s savings. So if you’re not willing or able to tolerate high-risk and extremely volatile investments with the potential for high rewards and losses. Then cryptocurrency investing may not be for you.
However, if you’re genuinely curious about the possibility of cryptocurrencies forever changing the way. We deal with finances and are willing to learn and manage the risk, then read on.
Good Reasons to Invest in Cryptocurrency
- You believe that cryptocurrencies are the way of the future. Though it will likely replace the traditional fiat money — if this happens, you want to be educated, prepared, and experienced.
- You support the social vision behind cryptocurrencies — that currency should be decentralized and entirely controlled by the people who use it.
- You understand and appreciate how blockchain technology works — you value transactions’ peer-to-peer aspect, security, and confidentiality.
Is Cryptocurrency a Good Investment?
The cryptocurrency markets are far more volatile than the stock markets. With less liquidity and more speculation than in traditional financial markets. Any cryptocurrency’s value can rise and fall by 30% or more in a day.
What Cryptocurrency Should You Invest In?
First, Blockgeeks does not give financial advice; second, it never asks anyone else what to do with your money, least of all Google! Continually educate yourself, understand the risks the all possible outcomes, and don’t make any investments if you are not 100% comfortable with your decision.