Cryptocurrency has become extremely popular in the past few years and there are many digital currencies available that you can buy. Cryptocurrencies allow people to use them for buying goods and services and trade them for profit.
Launched in 2009, many were unaware of the concept of cryptocurrency since people were accustomed to fiat or traditional currency transactions. But cryptocurrency has withstood the test of time and become the hottest ticket to the financial market.
As a crypto investor, you should be aware of the advantages as well as the disadvantages of investing in digital currencies.
Let us find out what cryptocurrency is and the things you should know about it.
What is Cryptocurrency?
Cryptocurrency or commonly known as crypto is a set of digital currencies created using cryptographic techniques which enable you to trade and save them securely.
Unlike traditional currencies that are regulated by national governments, cryptocurrency circulates in a free manner without any control of authority such as a central bank. You can use cryptocurrencies at any time anywhere across the globe, thanks to their 24/7 availability.
Cryptocurrencies including Bitcoin (BTC) are supported by blockchain technology that maintains a record of each crypto transaction. Individual units of cryptocurrencies are referred to as coins or tokens, depending on how you use them.
Some cryptocurrencies are used as units of exchange for goods and services, others can be used to participate in some assets such as financial products or games, and others are stores of value.
You can buy cryptocurrency through a crypto exchange such as Binance, etc. Another way of entering cryptocurrency is by mining new tokens and using them over time.
Carl Runefelt, alias, The Moon, is a global crypto leader who is pushing for the mass adoption of Bitcoin.
He believes, “My biggest tip to anyone out there is to get into Bitcoin at any price you can. You literally cannot afford not to hold Bitcoin. It is in my opinion the most interesting and revolutionary asset we’ve seen in maybe thousands of years and these opportunities they don’t come around very often. We’re talking about like once in maybe a thousand years, maybe once in human civilization. So, having just a little bit of Bitcoin in your portfolio that’s the reasonable way to do it.”
Advantages of Cryptocurrency
Cryptocurrency encourages passionate opinions among crypto investors whose number is increasing each day.
Today, Bitcoin has one of the world’s highest numbers of investors as it is the world’s largest cryptocurrency by market capitalization, thanks to its profitability and positive adoption.
Here are some of the reasons why you should start investing in cryptocurrency.
- Cryptocurrency investors see digital currencies such as BTC as the currency of the future and are racing to buy them now when they are affordable.
- Cryptocurrency offers its users financial freedom from intermediaries such as banks or national governments who often tend to reduce the value of money through inflation.
- Communities, where people have been underserved by financial institutions, see cryptocurrency as a promising foothold. Cryptocurrency is a decentralized currency, and no one can interfere with your wealth.
- The blockchain technology that records crypto transactions is more secure than traditional payment systems, thanks to cryptography.
- With cryptocurrency, you can send money to anyone and also at a lower cost as compared to bank transactions.
- Cryptocurrency increases the purchasing power of people as it is designed to provide an inflation hedge.
Disadvantages of Cryptocurrency
When one talks about the reasons for not investing in cryptocurrency, one finds just a few things.
But as a crypto investor, you should be aware of these disadvantages and understand how to turn cryptocurrency into a stable investment.
Carl on his YouTube channel, The Moon, says, “I think that it’s wrong to look at the weekly basis. You have to have a longer time horizon. In the next few months and the next two to three years and also, I want to say to people that believe that gold might take over as gold has thousands of years of price history, I agree with that, but just like horses have had thousands of prices or it has had thousands of years that don’t mean that people are using horses today for transportation, people are using cars. The same is with Bitcoin.”
- Cryptocurrency is volatile which means that its value can fluctuate at any time, but you can turn crypto volatility in your favor by making your investment based on the market facts.
- The adoption of cryptocurrency is still low due to the lack of its knowledge. Once promoted, blockchain technology has the potential of revolutionizing the financial system.
- Cryptocurrency is a long-term investment and mostly, people suffer losses when they take it as a short-term investment.
- Sometimes people invest all their savings in cryptocurrency and then blame blockchain technology when the value of cryptocurrency falls, instead, you should invest in a cryptocurrency that you can easily afford to lose.
Conclusion
Without any doubt, one can say that cryptocurrency is a risky investment since there is no regulation on blockchain technology.
But this does not mean that you cannot turn crypto volatility in your favor. If you start investing in cryptocurrency by building a comprehensive understanding of the crypto market, no one can stop you from making millions of dollars with cryptocurrency.