What is Cryptocurrency?
You might have come across the term crypto/bitcoin etc. often thrown around in the air. But what exactly is a cryptocurrency? Let us find it out – in simple terms, cryptocurrency can be termed as a virtual or digital currency. The first-ever created cryptocurrency was Bitcoin, in 2009 and since then people are starting to mine Bitcoin and the term cryptocurrency has become the talk of the town. As of 2021, there are more than 4000 variations of cryptocurrencies out of which 20 cryptos hold the market share for more than 90% attracting investment from across the globe.
Any individual/entity can buy and hold cryptocurrencies.
Why invest in cryptocurrency?
Investing in a cryptocurrency is not new. Bitcoin gained its popularity amongst investors in 2013 when the price hit a whopping $266, the two-fold surge in its cost as compared to its previous month’s performance. Certain economists and investors forecast a major change in the way cryptocurrency operates, considering that institutional money is going to make its way into the market backed by their investment in cryptos. There have also been market studies made on cryptos and its mere possibility of entering as a standard listing in NASDAQ is going to change the future of investment like never before.
Pros of investing in Cryptocurrency
While cryptocurrency has gained a substantial position in the investment / financial industry, let us also look at some advantages that may be reaped by investing in cryptos –
- High returns
- No payment fraud, extended and high protection
- Provide an opportunity for greater investment and liquidity
- No market hours – available 24*7
- Open doors for international investments
Let us also understand in detail the other advantages of investing in crypto and how this could become the future of investment as compared to conventional currencies.
The issuance of crypto is decentralized
No government or any regulation monitors the issuance of cryptocurrencies, especially bitcoins. Since this is a digital currency, the same is created by an individual (possibly the investor) without any third-party interference. Other than the investor himself/herself there is none who can claim or access or demand your investments. Also, there is no personal information being disclosed leading your trails, there are just two keys involved – private/public and investor plays his card as per his convenience using any of these two keys.
Transparency and lower risks of losses
As mentioned in the above paragraph, there is no personal information being disclosed and this always keeps your transaction details encrypted from the seller. Yet another advantage is its digital form and no hackers in the world can get their hands on these currencies and just take it away from you. Confidentiality of transaction and transparency to work in one’s own time with complete freedom is a major key motivating people to invest in cryptos.
Inexpensive form of investment
Cryptos have no limitation, they are like our emails/internet where all the relevant and necessary information are available just by sitting at your desk in the convenience of your home. They are global currency allowing investors to float their money across the globe without any restriction.
A passive, additional source of income
Since there is no huge money involved, investment in cryptos has become an additional source to many as a passive source of income. Like other investments, cryptos also have their own share of market fluctuations and an important point to note here is to not let such fluctuations impact you. Always consider cryptos as a long-term investment that shall provide you with a high return on investment at the end of your investment period.
To conclude, we have come a long way. Starting with barter systems to coins to paper-based currencies, the world has made its move to make significant changes in the investment market. Cryptos / digital currencies are only an addition to this transition. It wouldn’t be wrong to assume that major investments shall float in the world of digital currency. One disadvantage here would be the lack of regulation/government intervention to monitor investment. But with gaining popularity in digital investments, the time is not far where countries/governments would come together to make their own regulations and encourage investments.