Investing in cryptocurrencies

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Investing in cryptocurrencies
2018-09-13 in CRYPTOPEDIA

Investing in cryptocurrencies is a serious thing to consider.

Cryptocurrencies are considered to be one of the most popular investment choices nowadays. Bitcoin and many other altcoins attract investors and businessmen from all around the world. But what makes crypto industry so attractive for investments? Why more and more people decide to use crypto as an investment?

There are some important reasons for it.

Advantages of investing in Bitcoin (and other cryptocurrencies)

Developing net worth.

There are so many traditional currencies which lose their value in the modern world. There are many issues around the traditional currencies, so many people start looking for other options and possibilities. Cryptocurrencies are relatively young on the financial market. However, many people believe that the cryptocurrency industry has a great future: very soon it will become a real alternative to gold or USD (or other currencies like GBP, RUB, EUR, UAH, etc.)

Blockchain Technology

Blockchain, the underlying technology of cryptocurrencies, is very attractive to investors and businessmen.  The potential of blockchain technology to disrupt nearly every industry in some way cannot be dismissed. Even though there are still many obstacles to overcome before we see its full transformative impact.The network systems rapidly evolve from centralised to distributed ledgers. Blockchains, whether public or private, are a real-time ledger of records stored in a distributed, peer-to-peer fashion and independent from any central authority. Even if someone still doesn’t use Bitcoin, its influence is only expected to expand. Blockchain has the potential to be highly transformative to any company that processes payments. It can eliminate the need for intermediaries that are common in payment processing today. Any industry heavily reliant on contracts, such as insurance, financial institutions, real estate, construction, entertainment and law, would benefit from blockchain’s indisputable way to update, manage, track and secure contracts. Smart contracts, those that are embedded with if/then statements and be executed without the involvement of an intermediary, also use blockchain technology.

Tracking data

Cryptocurrencies are growing in price and becoming more and more popular. Bitcoin was founded in 2008 by an anonymous user Satoshi Nakamoto. Those who invested in Bitcoin 10 years ago became millionaires today: this idea is very attractive to many people all around the world. Many people find Bitcoin as “easy money”: the price surges over time and you can make money simply by investing and waiting. However, it is not necessarily true.

It is worth noting that Bitcoin was created only after many projects with similar idea failed. There were many attempts to create a digital currency, which would be fully decentralized and independent from governments, third parties and other various institutions. Flooz, Beenz, DigiCash…and it is not a full list of companies, which tried to introduce new cryptocurrencies. However, all of them failed due to different economic, historical, technical and financial reasons. Something was missing. In 2009 an anonymous called  Satoshi Nakamoto introduced a concept of Bitcoin. This is how an idea of  a “peer-to-peer electronic cash system” came to the reality. It os important to note that Satoshi Nakamoto is not a real name and no one know who is the real founder of Bitcoin. We do not know anything about him (or her?!): nationality, profession, gender, age, etc.

Disadvantages of investing in Bitcoin (and other cryptocurrencies)

Investing in cryptocurrencies is not always as easy and safe as it seems to be. Hacker attacks, high volatility, instability are among the most serious issues in the crypto industry.

Is Bitcoin a bubble?

There are many theories which approve or disapprove Bitcoin being a bubble. Many people compare Bitcoin to the tulip mania in 18thcentury. If Bitcoin is a bubble, its price will burst sooner or later. It means that many people will bankrupt and lose their funds. Cryptocurrency community is divided into two camps: those who support the idea of Bitcoin being a bubble and those who believe that Bitcoin (and other cryptocurrencies) is a new and very promising sphere worth researching. Jamie Dimon, the CEO of JP Morgan believes that Bitcoin is a real bubble and will burst soon. Cryptocurrencies are not backed by any serious asset or currency, which makes it volatile and instable on the modern market.

Cryptocurrencies are highly volatile

Volatility is a serious issue for most cryptocurrencies. It means that the price of Bitcoin is very unstable and jumps from high positions to very low ones in a short period of time. You can earn a lot, but you can also lose all your investments within one night! Be careful and never invest more than you can lose!

Is Bitcoin legal?

You can read an article on the legality of Bitcoin here.

There are many countries in the world which have banned Bitcoin. You need to checke whether cryptocurrencies are legal and regulated in the country where you reside. Otherwise, you may face some serious legal problems.

  • bitcoinBitcoin$3,517.01
  • rippleXRP$0.316010
  • ethereumEthereum$117.63
  • tetherTether$1.00
  • eosEOS$2.31
  • stellarStellar$0.102218
  • litecoinLitecoin$30.71
  • cardanoCardano$0.042319
  • tronTRON$0.023262
  • moneroMonero$43.27
  • iotaIOTA$0.294786
  • nemNEM$0.054548
  • dashDash$68.17
  • neoNEO$7.40
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