Is Cryptocurrency a Good Investment?

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In recent years, cryptocurrency has swept the nation. The idea of a currency that is divorced from a centralized bank has existed for a long time, but only recently has technology evolved to make this kind of money a real possibility. Cryptocurrency is still relatively young, so there is some meaningful debate about whether it is a good investment.

What is Cryptocurrency?

Cryptocurrency is a currency that is completely digital and removed from any kind of paper system or physical backing. Rather than being held in an account, cryptocurrency is kept in a ledger of accounts and transactions that is encrypted for safety. 

To make transactions, passwords are attached to a digital wallet. Every password connects to a block of transactions that is called a blockchain. Each blockchain represents a certain number of digital coins. 

How Does Cryptocurrency Have Value?

All currency has value because we agree it has value, and the same is true for cryptocurrency. Other factors that go into the value of a currency are demand for the currency, how much currency thre is, and how well the economy accepts it. Like most other currencies, cryptocurrency has no inherent value. It only has value because we trade it for real things.

Is Cryptocurrency Legal Tender?

One of the most important things to understand about cryptocurrency is that it is only useful in peer-to-peer exchanges. It isn’t backed by a central government or regulated by a bank. That means you can’t use cryptocurrency to pay expenses like taxes or repay loans in most cases.

What is The Value of Cryptocurrency?

If you can’t pay the government or many large centralized organizations with cryptocurrency, why is it valuable? Cryptocurrency has some significant values both in theory and in practicality.

  • Decentralized currency that can be used anywhere. What if you could conduct business all over the world without worrying about conversion rates or who takes what kind of currency? Cryptocurrency can be used anywhere on the internet without needing to rely on accountants or deal with any kind of conversion.
  • No One controls your money but you. Instead of giving your money to a bank or government to use while paying you a small interest, your money is not used for anything or controlled by anyone but you. In theory, if all of the central banks in the world collapsed, cryptocurrency would remain.
  • Privacy. If you want to be able to make purchases without worrying about your credit card being traced back, you’ll appreciate the privacy offered by cryptocurrency. All that is attached to your transaction is a private key. 

How Does a Crypto-currency Exchange Work?

  1. Person one sends out a transaction to everyone on the cryptocurrency network that they will be making a transaction to somebody else. Both people’s identities are protected through encryption codes.
  2. Cryptocurrency miners verify. Everyone gets the notification that an exchange is taking place, but only special members of the network with special computer rights can verify the transaction and put it on the ledger. To do this, they have to solve some kind of complex problem to ensure that it is not the first two people who are initiating a transaction. Whoever solves the problem first of the miners sends out the message that the transaction has taken place.
  3. Products or services are exchanged. Once the transaction is complete and confirmed, the product or service is delivered, and the transaction is complete. There is nothing that can be done to recover funds that might be lost or transferred incorrectly. Once the transaction is made, it is complete.

Are You Interested in Learning More About Cryptocurrency?

Cryptocurrency is a fascinating new way to invest. Choose a firm that has done extensive crypto research when you invest to feel confident that you are making a wise investment into cryptocurrency and fully understand the risks and benefits involved.

Jacob Maslow is a native New Yorker with  five children. He left his payroll manager position after finding that his true passion was in writing, and has never looked back.