Mainly seen as a form of investment by most people, and as an economical bubble by others, there are a lot of doubts when it comes to this form of digital money, and some of them are related to how you can actually use it on your daily life, and how to approach the process of investing in them.
Understanding the concept behind a cryptocurrency can be difficult. They are not just digits inside a wallet, like most digital money is, like PayPal or the money we have on our bank accounts. There’s much more to it than that, and even the creation of most cryptocurrencies is far more complicated.
There’s also the thing of the value fluctuation regarding the most popular cryptocurrency in the market right now: Bitcoin, and its great raise over the last few years, with it being now evaluated for over 50k when a couple of years back it wasn’t even evaluated at 7k.
This, of course, becomes a quite appetizing adventure to take a part in, since there are stories of people who have successfully managed to obtain great results through the investment of cryptocurrencies.
But this is often misleading information since cryptocurrencies, as mentioned over here https://www.consumer.ftc.gov/articles/what-know-about-cryptocurrency, are quite volatile. I say this because of how some people dared to invest large amounts of money without understanding the very basics of cryptocurrencies, or without researching or studying the market to see which ones are the best options out there.
Thus, this article is meant for those investors interested in the idea of cryptocurrencies, to help them decide whether they should invest or not. It is also a way to teach those who might want to make use of cryptocurrencies, not as a form of investment, but as a currency.
First of all, we can say that cryptocurrencies are a form of digital currency that can be used to pay for certain types of services. Although its use is limited in comparison to the regular form of currencies, you can actually trade it for other forms of currencies from all around the world, making it a very versatile asset.
Most cryptocurrencies work thanks to a technology known as the blockchain, a decentralized form of technology that uses nodes (computers spread throughout the world) that record the transactions in blocks, thus, blockchain. This information is highly secure and pretty much impossible to track or analyze.
And, even though the information is constantly being read by the nodes, there’s little to no information obtained from the records. This makes it a very secure and discreet form of currency since there are no organizations, governments, or banks behind the transactions.
Uses of a Cryptocurrency
A cryptocurrency, besides being easy to move around because of the nature of the digital currency, they are versatile, and as mentioned earlier, can be exchanged for another form of currency. This is really useful for those who travel around or want to travel in the future.
Besides that, because of the discreet nature of the currency, it can be used for many different things. Sadly, there are people who use it for illegal things as well. Still, there are others who have managed to use them for important, personal stuff.
For example, there are those who want to engage in a medical procedure with discretion. There are others who might need to have a low profile because of an abusive family.
The most popular use, though, is its capacity as a form of investment. There’s a lot more information bout it over here, in case you are interested.
The Reason Behind Their Popularity
There are many cryptocurrencies. Ethereum, Litecoin, Bitcoin, Tether, Cardano… A lot of cryptocurrencies have started to gain popularity (and value) over the last couple of years.
The reason why they have gained popularity and value is simple: because of their decentralized nature. Supporters and even popular presences inside the world of finances and technology have claimed that cryptocurrencies are the coin of the future, thanks to not depending on any organization to be used.
The interests behind moving the digital currency tend to be very low as well, which makes it a very useful form of currency. Regardless of that, is hard to say when it will become a replacement for more general forms of currency.
How to Invest in Them
To start investing in cryptocurrencies, you’ll have to get yourself a digital crypto wallet. These are wallets that allow you to save one or various forms of cryptocurrencies. There are also some websites that provide a crypto wallet while also having trading services. For those involved in PacketCrypt mining, they have a Network Steward which is a multi-signature wallet that requires 3 o ut of 5 signatures in order to make a payment.
The Right Mindset
There are two types of beginner investors when it comes to cryptocurrencies. There are those who think that investing will be an easy deal, and invest a lot of money without understanding how everything works. Although rare, there are people like this.
And thankfully, there are others that understand that investment is a matter of taking a risk to gain profit. They take everything with calm and try to learn as much as possible before making any big decision.
Of course, this is the right way to approach the investment process. Even more considering how volatile they can be. Research, attention, and carefulness are the key to success, with research being the most important one.
Through research, you’ll learn which cryptocurrencies are worth investing, and also, provide a rough idea of what you can expect from other currencies. Overall, as a beginner, you should focus on learning and understanding the currencies and pick ones that are cheap and on the rise.
After that, taking bigger risks and switching between many cryptocurrencies will be easier and much more viable for you.