Cryptocurrency is so “today”-nearly everyone on-line is accepting payment in cryptocurrencies these days. Mobile jackpot casinos, too! And it’s important that we all know as much about dealing with cryptocurrencies as we can.
Most investors are focusing on cryptocurrencies as a potential inflation hedge. However, most investors do not really appreciate Bitcoin or any of the other cryptocurrencies. As the world economy fluctuates, don’t dive into cryptocurrency investment as a strategy to protect your assets. In order to achieve the best results, you need to understand how cryptocurrencies work before you invest, so you’ll be confident that these investments will meet your individual needs.
Bitcoin was the world’s first cryptocurrency, a form of digital currency. It was invented in 2009 by an anonymous founder, using a pseudonym — Satoshi Nakamoto. There are numerous cryptocurrencies in the world today. None of these cryptos are managed by any public agency or bank. Instead, transactions are facilitated by using digital tokens that are recorded on a blockchain. The blockchain consists of digital information stored in a database.
Michael Anderson, co-founder of Framework Ventures, compares investments in cryptocurrencies to traditional investments. “Tokens or coins used in a decentralized network are not the same as shares in a company,” says Anderson. |As such, growing and proliferating these networks requires new models for success, and we’re still in the first inning of proving them out.”
Some things you need to be aware of when investing in cryptocurrency include:
There are now more than two dozen cryptocurrencies. They include Bitcoin, the first cryptocurrency, and others such as Nano, ZCash, Monero, Litecoin, Peercoin, Nxt, NST, Ripple, Gridcoin, Ethereum, IOTA, Aurora Coin, Mazacoin, Verge and others. Bitcoin has always been the most valuable cryptocurrency in the world. Investors should not be swayed by bitcoin’s position as a market leader because there are others who offer investment opportunities that are just as good as bitcoin.
Don’t be swayed by bitcoin’s position as a market leader – do your research before deciding on your preferred investment cryptocurrency.
Investing in cryptocurrencies is not for the faint-hearted. This is a speculative form of investment. Anderson adds: “Like most start-up companies, most crypto assets will fail and therefore become worthless. Non-professional investors should only invest the amount they ‘re willing to lose.”
In addition, it is important to get your investment portfolio started at an opportune moment. If you invest in the wrong time, you can experience rapid and extreme losses. (Of course, if you invest at the right time, your portfolio can grow by leaps and bounds). In May 2017, one bitcoin unit (BTC) traded for approximately $1,500 and by December 2017 the bitcoin value was $19,800. In November 2018, bitcoin was valued below $4,000.Obviously, the market was volatile.
Of particular concern to many is the fact that the value of cryptocurrency pricing can be said to be driven by emotion. When cryptocurrency is experiencing high usage and is incorporated into multiple industries, the price rate increases. You need the experience to be able to judge which cryptocurrencies and how many of them are going to be profitable for you.
If you look at cryptocurrency investments as being similar to other investments, it’s easy to assume that to get into the cryptocurrency market, you simply buy coins, hold on to them for a while, and then sell them for profit in the future.
This is what many investors are doing, but there are other options. You can invest in cryptocurrency using CFDs for cryptocurrency. A CFD is a “Contract for Difference” which is essentially a contract that predicts an upward or downward shift in the value of the coin (or the percentage of the coin).
So the owner doesn’t really own the commodity – instead, he puts money on a value-assessment that decreases or increases it. The advantage of this system is that it is possible to profit from both losses and gains. In addition, trading may take place at any time of the day, on any day of the week.
No investment is totally guaranteed but investments in cryptocurrencies are less certain than many others. Robert Johnson, Some financial advisors believe that the entire cryptocurrency exchange market is a bubble while others believe that the future market balances it. One thing that everyone agrees on is that the cryptocurrency network brings new offers for investors as new cryptos come onto the market all the time.
One of the things that is most appealing to many people about cryptocurrencies is also the most worrying. The technology of the blockchain is decentralized. The ledger that controls transactions between cryptocurrencies has no centralized oversight if a private key is lost or if one of the crypto central computers is hacked, the entire cryptocurrency can collapse. You need a strong password that hackers can’t easily hijack and store your private key, but nothing is foolproof.
Different countries’ tax authorities have differing views of cryptocurrencies but many follow the lead of the American Internal Revenue Service which has decided that it will not consider crypto a valid currency. That causes concern for many.
If you’re interested in investing in cryptocurrency, keep in mind that there are more options coming – new altcoins, digital currencies from some government-backed banks and stablecoins (cryptos that are backed by more conventional fiat currency assets). It’s important to keep searching and researching in order to get the most out of your investments.