Cryptocurrency: Friend or an Enemy? It Depends...

A crypto currency (or "crypto") is a type of payment that may be sent around the world without the need for a central monetary authority such as a government or bank. Cryptocurrencies, on the other hand, are created using cryptographic processes that allow users to purchase, sell, and trade them safely.

Learn More About Cryptocurrencies.......

1. What is crypto currency about?

A crypto currency (or "crypto") is a type of payment that may be sent around the world without the need for a central monetary authority such as a government or bank. Cryptocurrencies, on the other hand, are created using cryptographic processes that allow users to purchase, sell, and trade them safely.

Cryptocurrencies can be used to buy and sell goods and services, but they are most commonly employed as investment vehicles. Crypto currency is also a crucial aspect of the operation of some decentralised financial networks, where digital tokens serve as a transactional tool.

Bitcoin, the most popular crypto currency, has a history of price volatility. It reached an all-time high of over $65,000 in 2021 before reversing course. (You can find the current Bitcoin price here.)

The best bitcoin exchanges and platforms are listed below.

2. How do I get started investing in crypto currencies?

While some crypto currencies, such as Bitcoin, can be purchased with US dollars, others require bitcoins or another crypto currency to be purchased.

You'll need a "wallet" — an internet tool that can store your crypto currency — to buy crypto currencies. In general, you open an account on a crypto currency exchange and then use real money to purchase crypto currencies like Bitcoin or Ethereum. More information on how to invest in Bitcoin may be found here.

What crypto currencies are available through online brokers?

There are a few online brokers that give access to both crypto currency and equities if you're used to standard brokerage accounts. Robinhood, Webull, SoFi Active Investing, and Trade Station are among the online brokers analysed by Nerd Wallet. If you're looking for a crypto currency-only exchange, this is the place to go.

Where can I get Ethereum?

3. How many different types of crypto currencies are there? So, how much are they worth?

According to CoinMarketCap.com, a market research website, more than 16,600 distinct crypto currencies are traded publicly. Cryptocurrencies are still on the rise. On Jan. 10, 2022, the total value of all crypto currencies was at $1.9 trillion, down from an all-time high of almost $2.9 trillion late in 2021.

How to Choose the Best Bitcoin Wallet for You.....

4. What is the appeal of crypto currencies?

For a variety of reasons, people invest in crypto currencies. Here are a few of the most well-known:

Supporters regard crypto currencies like Bitcoin as the currency of the future, and they're rushing to buy them before they grow more valuable.

Some proponents prefer the idea that bitcoin frees central banks from controlling the money supply, as central banks tend to devalue money over time through inflation.

Others like the blockchain technology that underpins cryptocurrencies because it is a decentralised processing and recording system that is potentially more secure than traditional payment systems.

Some speculators are interested in cryptocurrencies because they are increasing in value, but they are unconcerned about the currencies' long-term acceptance as a means of money transfer.

What exactly is blockchain, and how does it function?

5. Is it wise to invest in crypto currencies?

Cryptocurrencies may appreciate in value, but many investors regard them as speculative investments rather than long-term investments. What is the explanation for this? Cryptocurrencies, like actual currencies, have no cash flow, thus in order for you to profit, someone else must pay more for the currency than you did.

This is known as the "greater fool" investment theory. In contrast, a well-managed business grows in value over time by increasing profitability and cash flow.

"Those who believe that crypto currencies like bitcoin will be the currency of the future should keep in mind that a currency requires stability."

Some prominent members of the investment world have warned potential investors to avoid them. Warren Buffett, the famed investor, recently compared Bitcoin to paper.

For those who believe that crypto currencies like Bitcoin will be the currency of the future, it's important to remember that a currency needs to be stable in order for merchants and customers to know what a fair price for goods is. Throughout much of their history, Bitcoin and other crypto currencies have been everything but stable. For example, after trading near $20,000 in December 2017, Bitcoin's value plummeted to around $3,200 a year later. It was trading at record levels again by December 2020.

This price fluctuation is a problem. People are less inclined to spend and circulate bitcoins now if they are worth a lot more in the future, making them less viable as a currency. When you have a bitcoin, why spend it?

6. Is it legal to use crypto currencies?

They are without a doubt lawful in the United States, while China has effectively outlawed their usage, and whether they are legal in other countries is ultimately a matter of national sovereignty. Also, think about how to protect yourself from scammers that see crypto currency as a way to defraud investors. Buyer beware, as always.

Learn More About Cryptocurrencies.......

7. How do I safeguard myself?

If you're interested in purchasing a crypto currency through an ICO, examine the fine print in the company's prospectus for the following details:

Who is the company's owner? A well-known and identifiable owner is a good sign.

Is it being pursued by any other significant investors? If other well-known investors want a piece of the currency, it's a good indicator.

Will you have a share in the company or will you only have access to cash or tokens? This is a crucial distinction to make. Owning a stake entitles you to a share of the company's profits (you're an owner), whilst purchasing tokens entitles you to utilise them like chips in a casino.

Is the currency already built, or is the company seeking funding to do so? The further along the product, the better.

Examining a prospectus can be time-consuming; the more information it contains, the more likely it is to be genuine. However, even if the cash is legitimate, it does not guarantee success. That's a different subject that necessitates a great deal of market knowledge.

Beyond those issues, simply owning bitcoin puts you at danger of theft, as hackers attempt to break into the computer networks that keep your money safe. After hackers stole hundreds of millions of dollars in bitcoins, one well-known exchange declared bankruptcy in 2014. Those aren't typical hazards associated with stock and mutual fund investments on major US markets.

Should I invest in crypto currencies?

Crypto currency is a highly speculative and volatile investment. Investing in known firms' stocks is often safer than investing in crypto currencies like Bitcoin.

Learn More About Cryptocurrencies.......