The term Cryptocurrency should not be new to us. Cryptocurrencies like Bitcoin may have been around for a few years, but when it comes to investing, they always appear to us as alien products. So it goes without saying that there are questions about how everything works and if Cryptocurrencies can really be a safe investment. Unfortunately, there are many misunderstandings that can lead some people to avoid Cryptocurrencies without knowing all the facts.
Let's take a look at some of the more problematic areas, separating fact from fiction.
The Real Value of the Currency
Since Bitcoin and other Cryptocurrencies are not backed by gold or silver or a government bank, some people are concerned that they do not have intrinsic value. Even though Cryptocurrencies are fully digital modes of currency, they still have real and tangible value.
Value is defined by rarity and utility, and it's easy to argue that Cryptocurrencies have both of these characteristics in abundance. Cryptocurrencies are seen as a safer, more private, and potentially more efficient alternative to traditional currencies. This makes them very useful for people who want to do their digital transactions using crypto. They are also accepted by a wider range of online merchants and retailers. And since the number of Bitcoin that can be produced is limited to 21 million, there should always be healthy demand. This means that Cryptocurrencies can be considered to have real value even if (in most cases) they are not backed by a physical currency.
How Secure it is
Cryptocurrencies are generally created using blockchain technology. Blockchain describes how transactions are recorded in "blocks" and sealed over time. It's a fairly complex technical process, but the result is a digital Cryptocurrency transaction book that is difficult for hackers to manipulate.
In addition, transactions require a two-factor authentication process. For example, you may need to enter a username and password to initiate a transaction. Then you may need to enter a passcode which will be sent to your personal mobile phone via SMS.
As long as the headings are in place, it doesn't mean that Cryptocurrencies won't be hacked. In fact, several expensive tricks have cost crypto startups dearly. Hackers hit Coincheck for $ 534 million and BitGrail for $ 195 million in 2018.
There are concerns about the potential of Cryptocurrency scams as well, and many people fear their money will be scammed if they choose to buy Cryptocurrency. Unfortunately, there are crooks in all walks of life and there is no doubt that some crooks will try to take advantage of investors' interest in Cryptocurrencies. However, the same is true for all areas of investment and it certainly shouldn't put you off. It just means you need to do your due diligence - use reputable investment platforms and avoid anyone making "too good to be true" statements.
It is true that Bitcoin has an extremely volatile history in which the price rises and falls dramatically. This means that it is better suited as a long-term investment: over time, its value has always increased. The fact that the market is so volatile can be good or bad depending on your appetite for risk. People who cannot afford to lose their money or who hope to make a profit quickly and easily can be disappointed. But any investor who likes to see the value of their investment fluctuate can earn huge returns when the market rebounds.
It should also be noted that not all Cryptocurrencies are as volatile as Bitcoin. There are plenty of options for those looking to be a bit more conservative with their investment. If this is a concern, you should do a little research to find out which parts are the most stable.
An Easy Investment
Since Cryptocurrencies are surrounded by a lot of jargon and technical terminology, it is easy to assume that there will be many barriers to entry for the casual investor. In fact, it couldn't be further from the truth - making your first crypto investment is as easy as finding a broker to do business with. You can buy, sell and save your currencies with just the push of a button. Check out Cryptocurrency investing apps like Bitcoin Prime to see how easy it is to get started. We also recommend that you review Cryptocurrencies for a while before you start to make sure you have a clear investment strategy.
Big rewards come with big risks. In the past year, those who had invested earlier in Bitcoin have more than tripled the value of their investment, and never in the history of Cryptocurrency, such a steep rise in the value of the currency was witnessed. However, no one knows if the next year will be of its downfall. So make only that investment that can bear the risk associated with it.