Over the last few years, cryptocurrencies for many reasons became popular and more people than ever invested in cryptocurrencies like Bitcoin, Ethereum, and many others. In fact, 8% of Americans have invested in cryptocurrencies.
The word cryptocurrency is two words blended into one, crypto and currency. Crypto is a Greek word that means hidden and the currency is the word we all know. Therefore, the word cryptocurrency means, “the hidden currency” and this is exactly what it is.
Cryptocurrency is a digital asset designed to function as a medium of exchange. (money). Cryptocurencies uses strong cryptography to secure financial transactions. To be precise, cryptocurrency is a digital currency or digital money.
Most cryptocurrencies are decentralized networks, unlike centralized digital currency and central banking systems. As a result, cryptocurrencies are immune to government and central banker’s interference and manipulation.
- A cryptocurrency is based on a computer network. This decentralized structure allows them to operate outside the control of governments and central banks.
- The word cryptocurrency evolved from the encryption techniques used to secure the network.
- Blockchain is a way of organizing and ensuring the integrity of transactional data. Blockchain is an essential component of many cryptocurrencies.
- Cryptocurrencies are used primarily outside the existing government and banking institutions and are exchanged over the internet.
To wrap it up, cryptocurrencies are digital currencies. Their task is to allow secure payments online.
In a centralized banking system, FED, ECB, Bank of England, etc, corporate boards governments, and bankers control the supply of money, by the printing or not printing money, (fiat money) even with policies such as negative interest rates. They also demand similar actions to digital banking ledgers. (centralized digital currencies)
This is not the case in a decentralized cryptocurrency. In that case, the digital currency is produced collectively by the entire cryptocurrency system. The amount of digital currency produced is defined when the system is created and is publicly known. In a decentralized cryptocurrency governments, banks, or any other institutions or individuals, cannot interfere with the system or produce new units.
Cryptocurrencies are produced by miners. They are powerful computer networks competing against each other to solve complicated mathematical algorithms. The first crypto miner to crack the code is allowed to authorize the transaction. The miner also earns small amounts of cryptocurrency.
Reasons to Invest in Cryptocurrencies
1-Simple and Secure Transactions
Cryptocurrencies make it simple and secure to send money to someone else. Cryptocurrencies are exchanged with the help of both, public and private keys. This way keeps transactions secure and transfer fees low.
A down to earth serious investor never puts all eggs into one basket. True investment diversification is when a percentage of the portfolio is invested in non-correlated assets or alternative assets. Investing in non-correlated assets will help you bulletproof your portfolio.
Cryptocurrencies are non-correlated or else an alternative asset. A 5% to 10% of the portfolio invested in cryptocurrencies is now well accepted. Cryptocurrencies have seen consistent and explosive growth for a decade, it will be a pity for an investor to ignore them.
3-Protection from Governments and Central Bankers
Regardless of the cryptocurrency, you choose to invest in, Bitcoin, Litecoin, Ripple, Ethereum, etc. the government cannot interfere and manipulate any of them.
It is impossible for Uncle Sam to seize your Bitcoins from your wallet against your will. They would need your private key to access your funds. Without it, it will be impossible for them to crack it.
In addition, the government cannot print more digital currency either, as they do with paper money. After all, cryptocurrencies are decentralized currencies.
4-Cryptocurrency Great Growth Potential
If we compare cryptos to all other major assets such as real estate, bonds, precious metals, and stocks, cryptocurrencies are still in relative infancy. All other major assets have been around for hundreds of years.
Bitcoin, the oldest cryptocurrency has been around for only 10 years. The growth potential; is unlimited, who could imagine five years ago, for Bitcoin to reach $10,000. Those who did are filthy rich now.
5-High Returns Potential
We all know or heard one or two people who made it big investing in Bitcoin or another cryptocurrency. I personally happened to know someone who bought 10 Bitcoins for a total amount of no more than $120. You might not become a millionaire by investing in Bitcoin but, you can experience some high returns.
Due to cryptocurrency blockchain technology all transactions are easy to verify and thus, it encourages users to be honest.
Most cryptocurrency users enjoy transaction privacy. The reason for that is, a cryptocurrency wallet is not tied to people but rather to one or more specific keys. Cryptocurrency owners are not identifiable but, all transactions are available on the blockchain.
The Future Of Cryptocurrencies
A cryptocurrency is a digital currency that is created and managed through the use of encryption technology. Cryptocurrencies are a decentralized digital form of money and are free of government and bank manipulation. In fact, cryptocurrencies have the capacity to transform global payments.
Cryptocurencies have gained momentum, more people invest in them, thus more people use them. As cryptos grow their value grows too. With the number of people who use cryptocurrencies for payments and receipts on the rise, cryptocurrencies gain value whereas central currencies (Dollar, Euro, Yuan, Yen) devalue.
The never-ending demand for cryptos, especially Bitcoin is going to bring huge changes to the cryptocurrency market. Some economic analysts predict Bitcoin’s entrance to NASDAQ.
The introduction to Facebook’s cryptocurrency (Libra) will bring more people closer to cryptocurrencies.
No doubt, all these are going to add further credibility to cryptocurrencies and their uses as an alternative to conventional currencies.
Cryptocurrencies are Taking Over
The crypto doubters are out there. Their main argument is that Bitcoin and other cryptocurrencies are lacking mainstream adoption and will never get it.
This is not the case. Nowadays, you can use Bitcoin to buy sports tickets, airplane tickets, restaurant meals, etc. Tesla, Dell, Virgin Galactic, Microsoft, and many more corporations accept Bitcoin as payment.
The number of people using cryptos is growing rapidly, so is the number of businesses accepting cryptos as payment. The large popularity growth and the limited supply ensure long-term growth potential.
How to Invest in Cryptocurrencies
Do you know where to buy cryptocurrencies from? Do you know which cryptocurrency is worth buying? Here is all the information you need to know.
1-Choose an Exchange
If you are interested in buying cryptocurrencies you will have to find and choose an exchange. Exchange is the place where you can go to buy currencies.
There are a lot of different exchanges out there. When deciding which exchange to use, you will need to do your own research. There are a lot of questionable exchanges popping up these days and you do not want to get scammed.
2-Which Cryptocurrency to Buy?
When you find the place to buy your cryptocurrencies, the next step is to find which currency is suited to your investment. There is a large number of cryptos to choose from.
The most popular cryptocurrencies are:
Bitcoin is the biggest and most popular cryptocurrency at the moment. Over 60% of the money invested in cryptos is invested in Bitcoin.
3-Get a Cryptocurrency Wallet
When you purchase your currencies you will need somewhere to put them. A wallet. There are two types of wallets you can use. A software wallet and a hardware wallet.
A software wallet is best when you want to engage in any active trading.
A hardware wallet is similar to an external hard drive. A hardware wallet is suited to the investor who wishes to store his currency in a secure way. An investor who doesn’t plan to engage in active trading soon.
Cryptocurrencies are a new alternative asset to invest in. They are just about to transform global payments forever. They are also going to change investing forever. Popular digital decentralized currencies without government and central bank manipulation.
Cryptocurrencies are gaining momentum, they become stronger day by day. More people use them and more businesses accept them as a form of payment.
In my opinion, now is the time to embrace technology, now is the best time to invest in cryptocurrencies.
If you have been thinking of investing in cryptocurrencies but for various reasons held off, now is the time to turn things around and take action.