Is it wise to invest any amount of money in cryptocurrency as opposed to investing in other forms of investment? Investors and organizations are pondering on this question as they try to make the most out of their accumulated moneys. In any kind of investment, there is always the burden of fear from the unknown or uncertainty. The best way to answer this dilemma is to answer some of the frequently asked question in investment circles. This way one can identify the advantages and disadvantages of investing in cryptocurrency as opposed to other traditional types of investment.
Definition and examples of Cryptocurrencies
Firstly, cryptocurrency is a virtual or digital currency. The most famous one being the Bitcoin, which was created and introduced by Satoshi Nakamoto in early 2009. There other types of cryptocurrencies that include Ethereum, Dash, Monero, Litecoin, Ripple, PPCoin, Namecoin and Zcash among others.
How to acquire cryptocurrencies
One of the ways through which an individual can acquire cryptocurrency is by logging in to an exchange site and purchasing the amount that one feels comfortable with. One can analyze the prices then buy and sell as he or she pleases considering desired profits. The other way is to start by mining the cryptocurrency through transaction blocks that constitute block chains enabling one to earn commissions for finding them.
Advantages or benefits
• Cryptocurrencies ensure that transfer of funds between business or people is safe and exceedingly easy. Private and public keys are utilized to ensure transactions are safe and transference fees for funds are kept at a minimum low.
• Block chains are online ledgers and people can transfer them through computers ensuring that others are honest. This makes transactions transparent since different people can verify them.
Disadvantages or risks
• Crypto currencies are backed by computers and maths as opposed to other currencies that have precious metals to back the.
• There are no physical coins and notes to represent the currency and therefore no central repository making it hard to recover any balance in case of a system crash.
• Cryptocurrencies experience a lot of fluctuation and this can lead to the market being volatile meaning that a lot of money can be lost or gained within a short period.
• The possibility of theft is exceedingly adamant with the existence of hackers and the prices attached to the currencies.
