Cryptocurrency. It’s the buzzword in the world of investing in the present. But what exactly is cryptocurrency actually? Have you heard about Bitcoin, Dogecoin, Litecoin, XRP or Ethereum? They’re not embarrassing names of rock groups in the ’90s. They’re actually a type of crypto (aka digital currency). And they’re all the rage everywhere you go.
However, the million dollar (crypto?) problem is, should you make a bet on cryptocurrency? Contrary to what everyone on the internet shouts at you via their online soapbox It’s not an ideal investment for your investment future. We’ll discuss this in a moment. Let’s explore what crypto actually is.
What Is Cryptocurrency?
The digital currency is a type of asset that is used to invest as well as for purchase on the internet. You can exchange actual currencies, such as dollars, to purchase “coins” or “tokens” of a specific type of cryptocurrency. Find a bitcoin loophole if you wish to know more.
Consider it in this way: It’s something like exchanging your cash in a different country. It’s true that a Benjamin could purchase a delicious meal in the United States however, if you would like to indulge in fine dining in Italy it is necessary to have euros. We appreciate euros and dollars due to the fact that we are aware that we can buy products or services using these currencies. It’s the same with cryptocurrency. You can exchange your cash to crypto and then use it as money (at establishments which accept this method or payment).
What is the word crypto from? I’m glad you have asked. It is derived from cryptography, that refers to it is the process of writing and resolving codes. It sounds like the setting in the Indiana Jones movie isn’t it? Every cryptocurrency coin is an individual piece of software. They aren’t able to be duplicated, making them simple to track and distinguish when they are traded.
There are many stories of individuals who make (or loss!) many thousands investing in crypto. It’s like a modern-day gold surge all of a sudden.
How Does Cryptocurrency Work?
The cryptocurrency is traded from person to person over the internet without intermediaries such as banks or governments. It’s as wild and wild west of the online world. But there’s no marshal who can enforce the law.
Let us explain. Have you ever hired one of your neighbours to trim your lawn, or look after your dog when you were away? Most likely, you paid them cash. You didn’t have to visit the bank for an actual transaction. This is how you can exchange cryptocurrency. The cryptocurrency market is uncentralized–which means that no authority or bank is in charge of how they’re produced or what their value is and the way they’re traded.
Because of this the value of cryptocurrency is what people will buy or trade to exchange them. It’s pretty wild.
How Do You Store Your Cryptocurrency?
We’re getting pretty technical here. You keep your cryptocurrency in the digital wallet, which is usually an app or at the retailer where you buy your coins. The wallet you use gives you an individual key, a code that you input to authorise transactions. This is proof mathematically that the transaction was genuine.
Are you with us? Okay, good. We’re about to dive deep into the technology weeds.
Blockchain technology. Blockchains are like an extremely long receipt that grows each time you exchange cryptocurrency. It’s a record that is public of all transactions that have occurred within a specific cryptocurrency. It’s like it’s straight from the Matrix. Think of it as ledgers that show the past of this currency.
What Types of Cryptocurrency Are There?
Bitcoin is the most popular that everyone is familiar with However, it’s not necessarily the only cryptocurrency available. There’s Litecoin, Polkadot, Chainlink, Mooncoin . . . And, oh, just over 10,000 other types of coins with names that are a bit odd that are gaining popularity. Let’s focus on the most sought-after coins:
Bitcoin
Yes, it’s the common name that the majority of people will think of when talking about cryptocurrency. This is because it’s the very first cryptocurrency, and has been around for some time in the past. Bitcoin was developed around 2009, by an unidentified person with the pseudonym Satoshi Nakamoto, whoever that might be. 1And this is a big part of the underground look that people love. There’s no debating the fact that everything that is anonymous is a shady business.
Although cryptocurrency isn’t without its flaws and volatile, crypto investors appear to favor Bitcoin due to the fact that they believe it has a bit more strength than the other. It’s also valued higher than its rivals (for the moment).
Ethereum
It’s the second most well-known cryptocurrency following Bitcoin. Although Ethereum is similar to Bitcoin by using crypto currencies (called Ether), it’s slightly different. Ethereum is more complex due to the fact that it allows their users the ability to “mine” their coins. What does that actually mean? In the world of crypto, mining happens by using computers to solve incredibly complex math problems to ensure that all transactions in crypto are legitimate and add an element to the Blockchain (aka”the confirmation”). The people “mining” are then paid with ether coins.
Dogecoin
Dogecoin (pronounced “dohj-coin”) began as a joke in 2013, and has since become the most popular investment option. In the beginning the internet was abuzz with a viral meme floating around about the Shiba Inu (that’s a type of dog). The people who created Dogecoin chose to name their cryptocurrency in honor of that “Doge” meme, it became their mascot which is the remainder of history. Oh, we’re serious. You cannot make these things up.
All of this to say that there’s no shortage of currencies to invest in in the world of cryptocurrency. Based on the trend at the time (Dogecoin perhaps? ) You’ll be able to see the value of these crypto coins fluctuate as if you were on one of the swinging pirate ships at an annual carnival. If you’re chasing crypto based on the trend on a particular day, you’ll likely get in a coma too (just as you did from that rides at the carnival).
What Can You Buy With Cryptocurrency?
In the present, the majority of people see cryptocurrency as a way to invest. But the cryptocurrency market is growing at a rapid momentum and is becoming more widely recognized as a currency. It is likely to become more well-known as these currencies are gaining more credibility.
Certain major retailers like Whole Foods, Nordstrom, Etsy, Expedia and PayPal allow customers to pay with cryptocurrency. Also, two individuals who appreciate the tokens are able to trade them in exchange for goods or services. Let’s not forget about the entire digital art trend that is based on cryptocurrency, called NFTs which allows you to purchase digital artwork using digital currency, but this is a different story for another time.
Is Cryptocurrency a Good Investment? Four Things to Know
Before saying goodbye to dollars, and welcome to Bitcoin, Ether or Doge There are a few things to be aware of in advance.
1. The cryptocurrency market is volatile.
It’s true that crypto is the same hot as 12 year olds. Its value fluctuates up and down and then plunges to the bottom but you aren’t sure what you’re likely to receive every single day. The value of cryptocurrency goes through extreme fluctuations and peaks. There’s no doubt that some are trendy right now. But how long? A person sneezes and the value falls! It is risky to invest in cryptocurrency at best.
However, here’s the most amazing part: A new study conducted by Piplsay found that 50 percent of Americans believe that it’s safe to invest in cryptocurrency. 50 percent! Information Flash: Cryptocurrency definitely isn’t a 100% guarantee. It comes with a massive amount in risk. Let’s be honest that all investments carry the possibility of risk. But why go into the edge with something that is so fluctuating?
2. The cryptocurrency market is full of uncertainties.
There’s still a lot to be figured out that is to be worked out regarding how cryptocurrency works. Imagine that nobody is aware of who the Founder of Bitcoin is! Only a tiny percentage of people are able to understand the Bitcoin system and how to use it. Ignorance makes you vulnerable. We’ve always advised people that if they can’t explain your investment to a child of 10 years old then you shouldn’t be investing in them at all. You’re creating an enormous mess.
P.S. Although it may seem as if everybody and their grandpa invests in crypto, studies show that only 4 percent of Americans have actually done so.
3. The use of cryptocurrency can make fraud less difficult.
It only takes five minutes online to be aware that not every person has your best interests in mind. Scammers will do everything to gain access to your personal data and passwords, including you bank account. What’s more? Cryptocurrency makes it simpler for them.
We’re not saying that everyone who makes use of cryptocurrency is a criminal who’s evading government oversight and making fraudulent trades on the black market. However, If somebody wanted for a criminal act to be committed, and then fly off the radar, without being monitored, cryptocurrency will be the first come after them.
4. The cryptocurrency market has an unknown rate of return that has not been proven.
The trading of cryptocurrency is sort of similar to gambling. Since it’s traded from individual to individual with no regard to having actual rules, there’s no way to predict the rise and decrease of the value. You’re not able to discern the fluctuation or calculate the returns as you do with growth-oriented mutual funds. There’s simply not enough information or credibility to build a long-term investment plan that is based on cryptocurrency. Don’t risk your financial security here.
Should I Invest in Cryptocurrency?
It’s simple: investing in crypto isn’t the best way to earn wealth for the future. If you’re serious about making to make a sound investment make sure you don’t play around with the addition of crypto currency to your wallet. Here’s a better strategy If you’re free of debt or you have an emergency funds to be able to cover 3 to 6 month’s expenses and are ready to invest, you should focus upon placing 15% of your earnings in mutual funds for growth stocks. These are much safer than crypto.
Don’t fall for the nonsense simply because of hype. We’ve met with those who’ve borrowed money for a home or took out all of 401(k) earliere of plen for investing in cryptocurrency. Hell not! Don’t put everything on the line and put at risk the future of your finances, future plans for retirement, as well as the health of your family. If you don’t have the money to lose your money, you shouldn’t put it in something as risky as crypto.
A Better Way to Invest
The bottom line? The path to wealth is steady and slow, and there are he wayt too many unanswered questions regarding cryptocurrency. Can cryptocurrency be a more secure investment choice in the future? Sure. However, given the current situation simply affirm no.
The schemes to make money quickly are nothing more than they are -the aforementioned schemes. Don’t be a victim and invest every ounce of your hope, desires and money into. Instead, you should sit down with a SmartVestor with a heart that is a true teacher. Let them guide you through a sound plan for investing. And don’t forget about the 401(k) people. It’s the most popular wealth-building tool for millionaires! Millionaires don’t earn wealth with risky investments, such as crypto.
