Cryptocurrencies are digital assets people use as investments and for purchases online. You exchange real currency, like dollars, to purchase “coins” or “tokens” of a given cryptocurrency. There are many kinds of cryptocurrencies. Bitcoin is the most famous, but Ether, Bitcoin Cash, Litecoin, and Ripple are a few others. All sorts of big tech and finance companies want a slice of crypto pie. Even Facebook has created a cryptocurrency called Libra.
The word cryptography means the art of writing or solving codes. Each “coin” is a unique line of code. Cryptocurrencies cannot be duplicated, which makes them easy to track and identify as they are traded.
You have probably heard of people making (or losing!) hundreds of thousands of dollars by investing in cryptocurrencies. It feels like a modern-day gold rush. But cryptocurrencies have actually been around for about 10 years. The earliest cryptocurrency was Bitcoin, created in 2009 by an unknown person who goes by the name Satoshi Nakamoto.
Are cryptocurrencies a good investment?
A lot of people think that cryptocurrencies and the technology behind them are the way forward for the world of finance and it is not too far-fetched to have that belief as there are innumerable examples of big banks teaming up with blockchain startups to improve or expand on their products. Digital currencies are superior to traditional fiat currencies in many ways such as quick transaction speeds, transparency and much lower fees.
As an investor, there are a few main reasons to keep in mind when wondering if you should invest in cryptocurrencies:
On the other hand cryptocurrencies, just like any other investment with the potential for high returns, is a risky venture. So, if you are new to the world of investing and you are considering investing in the virtual currency, it is important to evaluate the costs and benefits of doing so before adding cryptocurrencies to your investment portfolio.
In recent years, digital currencies have been gaining traction, and despite the fluctuations in the value of bitcoin and other cryptocurrencies, more and more people start seeing cryptocurrency as a viable investment option.
The most outstanding characteristic of cryptocurrency is that it is independent of any government or central bank.
The truth is that investment in cryptocurrencies is not for everyone. Some groups and individuals have been, and still are, skeptical about the whole idea to the extent of dubbing cryptocurrency a ‘bubble’ that will eventually burst. However, the crypto market proved to be more than just a passing fad, and the benefits of investing in cryptocurrency are known to be profound.