What Is Cryptocurrency and why it is so popular?
A cryptocurrency is a form of payment that can be exchanged online for goods and services. It’s a peer-to-peer system that can enable anyone anywhere to send and receive payments. Instead of being physical money that is carried around and exchanged in the real world, cryptocurrency payments exist purely as digital entries to an online database that describe specific transactions. Cryptocurrencies work using a technology called a blockchain. Blockchain is a decentralized technology spread across many computers that manage and records transactions.
Cryptocurrency got its name because it uses encryption to verify transactions. This means advanced coding is involved in storing and transmitting cryptocurrency data between wallets and to public ledgers. Encryption aims to provide security and safety.
Is cryptocurrency real money?
Cryptocurrencies are an alternative to traditional money. Today, some outlets accept cryptocurrencies as a form of payment. However, they bear little resemblance to other asset classes because they are intangible and extremely volatile. They are mainly used by traders for speculating on rises and falls in value.
How many cryptocurrencies are there?
There are over 2000 cryptocurrencies available to buy and sell, though most have little value. Of these, bitcoin, ether (the token of the Ethereum network), ripple, bitcoin cash (an offshoot of bitcoin), and litecoin are among the most valuable by market capitalization.
Why it is so popular?
Cryptocurrencies appeal to their supporters for a variety of reasons. Here are some of the most popular:
1. Supporters see cryptocurrencies such as Bitcoin as the currency of the future and are racing to buy them now, presumably before they become more valuable. 2. Some supporters like the fact that cryptocurrency removes central banks from managing the money supply since over time these banks tend to reduce the value of money via inflation. 3. Other supporters like the technology behind cryptocurrencies, the blockchain, because it’s a decentralized processing and recording system and can be more secure than traditional payment systems. 4. Some speculators like cryptocurrencies because they’re going up in value and have no interest in the currencies’ long-term acceptance as a way to move money.
The fact that the cryptocurrency market is not regulated has both – brighter side and a darker side. For those willing to invest massively without having to deal with any obstacle whatsoever, it is an advantage. Those unwilling to take risks need to extra cautious of not investing money that they aren’t willing to lose. A nicely laid out plan as to how should cryptocurrencies be classified and a clear regulation would make it easy to predict the future.
1. Though cryptocurrencies can be used to make purchases, what is worth noting is that they are not yet widely accepted among retailers and other businesses. 2. Some look at cryptocurrencies from an investment point of view. People invest in them hoping that the future would see an increase in value. However, what needs to be understood here is that the demand cycle is just unpredictable. So, assuming that the future would give a higher return on investment might sound vague for many.
With an exponential increase in the number of people becoming aware of cryptocurrencies, it is evident that the future would see huge investments in the same. That said, it is always better to have a fair idea pertaining to the volatility and risk factors of cryptocurrency before investing.
Ultimately, the future of cryptocurrencies — their value, security, and staying power — is still up in the air. But the experts spoke to believe owning some crypto could create value over time. Whatever your interest or motivation, experts stress the importance of making sure you understand the unique volatility and risk factors of cryptocurrency before investing.