Beginner’s Guide to Cryptocurrencies
I’ve seen a lot of my friends invest in cryptocurrencies only to realize that it’s a volatile asset that can get your initial investment to the ground. Over the years, a lot of ICOs turned out to be scams that have been riding the popularity of Bitcoin. Everything changed when Bitcoin reached near $20,000 valuation in 2017. After that, a lot of people, even those who lack the knowledge of the technology wanted to be part of something that can get them instant profits.
For every beginner, it is important to learn the basics. Here’s a simplified guide that might help you with your decision to invest in cryptos.
What are Cryptocurrencies
In a nutshell, cryptocurrencies are decentralized currencies wherein transactions are verified using the blockchain. Imagine the blockchain different computers interconnected in a network. Each computer is going to validate a transaction and then list the transaction into the blockchain. The blockchain is something that can be accessed by everyone. And on top of that, it is something that you can’t tamper with.
But why cryptocurrencies when we have regular currencies? Bitcoin, which is the most dominant cryptocurrency today, was a product of the 2008 crisis. Satoshi Nakamoto, the enigmatic individual/group that started Bitcoin, thought of giving the world a currency that is digital and is not bound by laws.
Should You Invest in Cryptocurrencies?
A lot of people ask whether or not they should invest in cryptocurrencies. For one, there are a lot of things that you will need to consider. Given the volatility of cryptocurrencies, are you willing to risk your investment hitting zero? Or are you ok to see your investment decrease in half by the following hour?
Also, you need to be asking your goal. A lot of people have faith in Bitcoin that they look at it as the new gold. Many believe that in the next decades to come, Bitcoin is going to replace currencies and is going to be accepted everywhere. They also believe that Bitcoin could be a good way to protect your asset from inflation.
Next, you also need to know the laws in your country. How are you supposed to turn your cryptocurrency into cash? Nowadays, authorities are hitting exchanges to make sure that cryptocurrencies aren’t used in money laundering and other illegal activities.
In case you are serious about investing in cryptocurrencies, which cryptocurrency are you going to invest in? If you are going to invest in an ICO, did you know that 81% of ICOs are said to be scams?
Does It Replace Currencies?
There are a lot of people who argue that it can replace currencies. At this point, it is far from happening. Though there are stores that are now starting to accept selected cryptocurrencies, it is still not that popular.
Though cryptocurrencies can have its perks from helping countries that are dealing with economic crisis to find a more stable alternative to their highly inflated currency, cryptocurrencies remain unpopular today. Perhaps, it will slowly gain traction in time as we get to the point where we don’t need to wait for a long time to validate transactions.