Crypto-Currency

 

Cryptocurrency

What actually is cryptocurrency?

Crypto is a type of digital currency, which is an extension of cryptocurrencies such as the blockchain or peer-to-peer networks. They can be purchased and traded within a network on the Internet, in other words within exchanges on decentralized data stores like the Ethereum smart contract, which runs between online traders globally. The main purpose of cryptocurrencies is to store value for people, businesses, financial institutions, etc. It allows transactions made without the need for a central authority to intervene. Therefore, it has become one of the most trusted investments over the past decade. However, there are some concerns about being too trusting towards companies that have created this coin. Some companies also threaten their intellectual property, making others lose out on business revenue if they create something outside of their norm and regulation. In short, cryptocurrencies cannot be trusted because they will never follow the required chain of custody protocol. This means that you will not have control over who makes these coins, what and how much is given to each user. It is extremely difficult to track information because anyone who wants to use them must comply with any regulations that govern them, with many countries having extremely strict rules on privacy and security. You cannot use this kind of crypto currency and not know who makes it as every transaction is broadcasted on the internet and stored on multiple databases making it possible for anyone to watch all your records. This means that even though you might believe that banks have taken good care over the past 10 years to protect its clients from criminals using cryptocurrencies, they do not necessarily have a full understanding of the future implications when it comes to these types of assets. This includes Bitcoin’s price dropping below $6,000 dollars a coin, a record low for a global reserve currency, but the underlying issue is still how and why cryptocurrencies are set up in the first place. With so many different cryptocurrency exchanges being established across the world, no single company could possibly oversee everything that happens within their premises and therefore would have to sell itself down the river. For instance, just because Apple is investing in ‘Blockchain technology’ does not mean that they are ready to go public with Bitcoins or Ethereum. There is no way for Microsoft’s Blockchain company to monitor the situation since they are involved with Microsoft Azure which offers many benefits for its customers like security, scalability, storage, and data mining. And yet, when they announced that they want to make an investment into cryptocurrencies, everyone began wondering whether they were missing out. Many skeptics say that their decision was motivated by lacklustre returns from the investments and that they probably could have done more to promote their platform instead of making themselves look better. Nonetheless, this led to increased criticism of bitcoin and caused a market cap drop in its first week as a result of all the talk on Reddit about bad news. But now the hype train is coming back around and many investors are seeing this as a chance to profit by picking up the asset. According to reports by CoinMarketcap.com, after taking time to educate themselves, almost half of US investors now see cryptocurrencies as a safe bet and the rest believe this is a great way to invest in this industry. Despite all the risk involved in picking up cryptocurrency for example bitcoin, it provides greater gains than traditional investments such as stocks or bonds. Most investors will keep them because they are easy to pick up, cheaper alternatives than gold or cash. A study is found that if those buying cryptocurrencies had been interested in money earlier, over 60% would have lost out in comparison to the losses seen in traditional assets. Also, according to experts, cryptocurrencies hold a long term positive outlook for the global economy as well as the whole world in terms of the growth that they have experienced in recent times. All of these factors may provide many people with the opportunity to enjoy the benefits of both bitcoins and traditional investments like stocks, bonds, commodities and even real estate. When considering alternative investments such as cryptocurrencies, it is very important to note that none of these currencies have the same level of trust as traditional investments and will often have some hidden risks. This is because unlike traditional currencies, cryptocurrencies are easily copied and changed and once made, it is impossible to trace the funds if one wishes to make use of them. But with large sums being invested in various cryptocurrencies, this does not mean that the entire stock market could crash to zero overnight, instead people will either gain from these investments or they will fall. One factor that investors should always consider is the speed at which the cryptocurrencies are developed before anything else such as social media or new technologies. Having said that, when looking at specific industries, cryptocurrencies might seem appealing because they offer diversification, as you could invest in a variety of different domains such as fintech, agriculture, food manufacturing, gaming, automotive and even healthcare. As mentioned before, cryptocurrencies like Bitcoin provide a higher interest rate than other investments, which enables more people to invest and even earn from the process. However, when focusing specifically on banking, cryptocurrencies have shown strong results for shareholders compared to their peers, especially compared to traditional investments. So far, these types of assets seem to outperform the main markets for equities and are generally considered extremely stable because the prices of bitcoin have fluctuated significantly in the past year. This has helped many people invest in cryptocurrencies because it seems to be highly volatile, meaning that they could be affected by sudden changes in sentiment. Nevertheless, when it comes to cryptocurrencies there is always the risk of losing all your funds. Even one-time investors will get caught up in the volatility and hence losing all their hard-earned cash. Luckily, there are several ways to beat the negative return of Bitcoin and other cryptocurrencies. These include: trading them or holding onto them until you think they will rise. If someone bought bitcoins earlier and then later sold them during the bull run, he would have paid less in return than if he held the coins forever. Investing in crypto is highly risky in nature. People should only invest in cryptocurrencies that have already gained a substantial amount of popularity and are backed by significant amounts of capital. This can be referred to as a ‘short squeeze’ where one investor sells his position to another who buys the right amount at a lower price. Another way to overcome the risk is by simply waiting for the right moment to buy them as it is highly likely that the price will eventually go up. By this, people are able to reap the profits quicker and move quickly through the ups and downs of blockchain projects. Lastly, the downside of this is that cryptocurrencies are subject to scams and hacks in the form of fraud and theft of cryptocurrencies. Unfortunately, the best strategies are to avoid such instances completely and to seek help from certified professionals or banks to detect and protect yourself from potential cyberattacks, theft and loss.