What is Cryptocurrency, And Is it Worth Investing In?
You might have heard the term cryptocurrency and have been wondering what is it exactly? A cryptocurrency is a digital asset that can be used to buy products or services and, with the help of some of the best brokers, it can be traded as a form of investment. However, cryptocurrency is not like other currencies because it is not a physical asset.
What is cryptocurrency?
Cryptocurrency is a digital currency that can act as a mode of payment for services and goods. It uses blockchain technology, a decentralized technology that spreads across millions of computers (mining hardware) globally. It is these computers that record and manage all the transactions. Many companies and individuals prefer to transact using cryptocurrencies because they are relatively safer to use than ordinary currencies.
As of now, there are over 2,000 publicly traded cryptocurrencies in the world, some of which include EOS, Monero, Libra, Bitcoin, Tether, Litecoin, Ripple, Etherium, Binance Coin, and Bitcoin SV.
Whenever a new cryptocurrency is introduced into the market, there is an initial coin offering (ICO), similar to the initial public offering (IPO) for publicly traded shares.
According to the data from top online trading sites, all the cryptocurrencies in the market had an accumulative value of $246 billion by June 2019. Bitcoin, which is the most popular cryptocurrency, had a total value of $136 billion by that time, almost 50% of the market.
Is It Worth To Invest In Cryptocurrency?
Cryptocurrencies are known to be volatile, their values fluctuate depending on the forces of demand and supply. For example, in the period between 2017 (October) to 2018 (January), the price of Bitcoin varied by about 8%. This change was more than double its price variation in the one-month period that ended on 15th January 2020.
Just like any investment, there are risks associated with an investment in cryptocurrencies. That’s why many brokers advise their clients to strive to avoid risks as much as possible, especially if the risk touches on their hard-earned money. People who are new to this kind of investment usually work with the best broker for cryptocurrency to earn some returns from their investments.
People use cryptocurrencies differently. While the top online trading sites and investors use them as trading tools to make money, other people use them as a payment method for buying goods and services online.
Still, there’s another group of people who use them as a store of value. How is this possible? In times of uncertainties and pandemics, there’s a loss of value in the leading stocks and major currencies like the USD. For this reason, many investors will look for safe assets to hold their wealth. These investors find safety in both cryptocurrencies and gold. That explains why, in times of calamities like the coronavirus pandemic, most top online investment platforms trade cryptocurrencies more than stocks.
They understand that when the value of USD decreases, the value of the cryptocurrencies will increase, and vice versa.
How To Buy Cryptocurrencies
You can use the USD to buy some cryptocurrencies like bitcoin. But some cryptocurrencies can’t be exchanged with cash, meaning you must use another cryptocurrency to buy them. To buy any cryptocurrency, you’ll need an online app called a “wallet.” Top online trading sites can help you create both a wallet and a platform where you can trade in cryptocurrencies.