Digital currencies have been the hottest investment over the last year. In 2017, Bitcoin rose from $1,000 to just under $20K. The same is true for other digital currencies as well. What's all this fuss about? To put it simply, digital currency is a form of money that is made up of bits and bytes stored on a computer system and used as a medium of exchange. If you want to invest in cryptocurrency but don't know where to start, here's what you need to know:
- What are cryptocurrencies? How do they work and what makes them different from traditional currency? Should I invest in cryptocurrency?
What are cryptocurrencies?
Cryptocurrencies are a form of digital money that you can use to buy or sell things anonymously without having to worry about banks. They're not printed like traditional currencies, so they have no physical value. However, they do have value because people can trade them for goods and services from those who agree to accept the currency.
The first cryptocurrency was Bitcoin which was created in 2009. Since then, other cryptocurrencies have been created as well with other types of coins being popular as well.
How do they work and what makes them different from traditional currency?
In a nutshell, cryptocurrencies are digital currencies that use cryptography to create and store transactions. They're created "out of thin air" with the help of sophisticated software.
When you purchase cryptocurrency, you're buying into an opportunity to use it as a medium of exchange in the future. Cryptocurrency is entirely decentralized- no one person or organization can control it. All this makes it different from traditional currency, which is issued by central banks to maintain stability in an economy. For example, when you deposit money at your bank account, your bank will hold onto it for you. Not so with cryptocurrency! If you buy Bitcoin, for instance, it's stored on your computer system and is yours to spend in whatever way you see fit.
So, should I invest in cryptocurrency? That's an important question to consider before making any investment decisions. Cryptocurrencies still have lots of potential for growth but there are also risks involved- including how their value could change over time (especially if governments start regulating them).
Should I invest in cryptocurrency?
Digital currencies are becoming more and more popular. This is partly because the value of these currencies has skyrocketed in recent months, making them an attractive investment option.
Cryptocurrency is a form of digital currency that uses encryption techniques to generate units of currency and verify transactions. It doesn't rely on government-issued paper money or physical coins to function. Instead, cryptocurrency relies on cryptography to secure transactions.
Cryptocurrencies use decentralized control as opposed to centralized electronic money and central banking systems.
The most common type of cryptocurrency is Bitcoin which was created in 2008 by an unknown person using the alias Satoshi Nakamoto. Other types of cryptocurrencies include Ethereum, Litecoin, Monero, Zcash, and Dogecoin among others.
What makes digital currencies distinct from traditional currencies is its decentralized nature which means it's not controlled by a single entity like a bank or company. This also means that there's no one party controlling or regulating the currency meaning it's not subject to financial institution manipulation or interference from a third party.
Investing in cryptocurrency is a risky prospect that can pay off big time, but don’t forget to take the time to research the risks. This new type of currency requires a different type of investment strategy. An investment in cryptocurrency is not for everyone, but if you have the right risk tolerance and are willing to learn about this new form of currency, you might find that cryptocurrency is the next big thing.