As you know these days on trend words in crypto world are Bitcoin, Dogecoin, Litecoin, XRP or Ethereum. You must be totally wondering what these are which people are going crazy about. They’re actually types of cryptocurrencies and trending everywhere.
What Is Cryptocurrency?
Cryptocurrencies are digital assets people use as investments and for online purchases. You exchange real currency, like dollars, to buy “coins” or “tokens” of a certain kind of cryptocurrency.
Cryptocurrencies are pieces of digital code that are traded as an asset. These digital coins are built on blockchain, a decentralized ledger technology that offers a permanent, immutable record of transactions divided among different nodes.
Use of crypto makes transaction superfast anywhere Globally. You can exchange your money for crypto and use it as real money where it is acceptable as payment.
The oldest and most popular cryptocurrency is bitcoin, which came in 2009. Currently there are thousands of digital coins available to buy and sell, but only a handful for example bitcoin and ethereum are traded on key exchanges.
How Does Cryptocurrency Work?
Cryptocurrency is exchanged from person to person on the web without a middleman, such as in normal form of money like a bank or Government. They’re decentralized, Government or bank does not have control over how they’re made, their value is, or way it is exchanged. Because of that, cryptocurrencies are attractive as it is futuristic, exciting
Most popular Types of Cryptocurrency
Bitcoin it was the first cryptocurrency
Ethereum: This one is the next most popular cryptocurrency after Bitcoin. Ethereum is a bit more complex because it allows its users to “mine” their coins.
Dogecoin
Is Cryptocurrency a Good Investment?
Do not invest more unless you have money in excess, to try investing in cryptocurrencies. To be on a safer zone if you are taking huge risk with your savings, wait for the market to stabilize and the government to come out with its proposed regulation to understand where the cryptocurrencies market in India is headed. There are pros and cons both, we are explaining in below points:
PROs
It could be the next big thing
Crypto is a global digital currency, and it can be used for transactions across countries without having to pay high charges unlike in normal banking transactions, also at a speed of super computer like within a matter of seconds. This could revolutionize the banking and financial services industries of the world.
Right now, cryptocurrency isn’t widely accepted around the world as regulations are not clear about same. But as more merchants start to accept it as a form of payment, it could potentially have an enormous impact on society.
It could help diversify your portfolio
If you have good savings and try to take some risk, you may invest a small portion of your portfolio in cryptocurrency. In fact, diversifying into crypto industry can give you the incentive to have a better understanding of crypto and the way it works. The better you understand crypto, the better decisions you’ll be able to make in coming time.
CONs
Crypto is extremely volatile
One tweet from Elon Musk is enough to scare all cryptocurrencies to fall and to rise. One of the biggest risks of investing in crypto is its extreme volatility. Bitcoin, for example, lost roughly 80% of its value at one point of time earlier.
If you’re the risk-averse investor, investing in crypto could be too much of stress for you. If you are not ready to deal with the short-term ups and downs do not go for it.
Very speculative
Cryptocurrencies are far riskier than most stocks because they’re a relatively new type of investment. Uncertainty of Government rules makes crypto a high-risk investment.
Other risks involved in owning crypto
Aside from the risks of crypto as an investment, there are also risks involved in owning and keeping cryptocurrency itself. Cryptocurrencies don’t trade on traditional stock market exchanges except for one or two crypto. Most crypto are bought and sold through crypto exchanges. There is a special digital wallet to hold your crypto currency. Digital wallets aren’t 100 percent safe so this is another risk.