Cryptocurrency investing is a hot topic among many people today. If you are starting to invest or you may be interested in investing in Cryptocurrency, then this article will give you the basic overview of the key points you need to know about this exciting digital currency market.
As always, before you get started in investing, you need to due diligence. The goal is to understand how Cryptocurrency works and how to get a return on your investment.
What is Cryptocurrency?
Cryptocurrency is another type of money that acts like the US Dollar, Euro, or Peso etc. The difference is it is virtual, so you cannot physically hold it. This is similar using money connected to a credit card. This virtual money is stored in a digital wallet platform, which can be accessed from any computer or smartphone.
Cryptocurrency platforms have what are called blockchains. Blockchains record the transaction history of the currency. Additionally, the blockchain allows the currency to be secured through multi-layer security systems. The blockchain also allows Cryptocurrency to have no single person or government authority to control it.
Blockchain allows for 3 actions:
- Your money is allowed to be transacted as normal currency
- You have 24/7 access to your money
- Your money transactions are recorded to provide integrity of the currency
Another Cryptocurrency process is “mining.” Cryptomining is how the currency get verified and put into the market.
Normally this takes very powerful computers to accomplish the mining process. However, over the past few years, people are now able to mine Cryptocurrency directly from your smartphone.
Cryptocurrency vs. government
The idea of having a currency that is not controlled by one organization is very empowering to people. In our current economic environment, we see the government printing money like it is going out of style. This is because the US Dollar and other government-controlled currencies are part of a centralized banking system.
A centralized banking system gives one entity control over the currency. This is a small group of people who has the power to determine what the value of money should be.
For example, the cost to make a US dollar bill of any amount is $0.12 to print. After the money is printed, the government has the say on what the money is worth by changing the faces and numbers they print on the bill.
They say a $1 bill is worth $1.00 and a $100 bill is worth $100.00. This is acceptable because it is backed by the promise of the government. In reality though, paper money has no tangible assets that back it like gold, for example.
After the 2008 financial crisis, Bitcoin arose. This is because the people began to lose faith in the centralized currency and wanted to take back some financial control.
Most Cryptocurrency is decentralized (controlled by the community) with an unchanging record of exchange, transparency, and a cap on how much can be made.
3 Pros of Cryptocurrency investing:
Transparency and community control
Being able to see how the currency is being used and not having a single authority control your money allows for total transparency. This allows anyone to trade, buy, and sell with each other and it does not allow for endless printing of money.
Cryptocurrency gives you 24/7 instant access to your money. The Crypto market does not sleep, which mean you can buy, sell, and trade whenever you want. This is much different from the stock market that has openings, closings and new weekend trading specific hours.
This is all thanks to the market being completely virtual.
Security is always a big concern, however, with Cryptocurrency platforms have some great security features. One awesome feature is the multiple layers of identification to access a platform.
If you do not like to have your money stored directly on a computer you can purchase a hardware wallet such as Billfol. Billfol is a hardware wallet that stores all of your Cryptocurrency in the palm of your hand.
3 Cons of Cryptocurrency investing
Volatility in the market
The cryptomarket is not very stable because it is so new and young. Bitcoin is a great example of the volatility because in 2008, Bitcoin was worth less than 1 penny. Then, in 2017, Bitcoin reached a high of $20,000. Currently, the coin sits around $8865.00.
Growth of Cryptocurrency
Since there are over 3000 types of Cryptocurrency, they all need to fight to be the best. Some types of Cryptocurrency will be successful while others will not be.
Research different Cryptocurrency companies to form an educated decisions on which company you think will grow. Some of the top Cryptocurrency companies are very heavy in the digital security world. This could help their currency grow so that you can make a good return on your investment.
Currently, the government controls the money in the countries we live in. If they lose control of the money, then they could lose control over the people.
Government control can effect how Cryptocurrency grows.
Also, many high ranking officials of the US Government publicly speak against Cryptocurrency. However, what is interesting though, is that the U.S. government is actually one of the largest holders of bitcoins…
Could Cryptocurrency replace the current financial system?
According to many experts, there is a very big possibility of Cryptocurrency replacing the current financial system over the next 10 years.
Big banking systems are beginning to partner with Cryptocurrency providers such as Ripple (XRP). This could make a universal world currency for bank transfers according to an article in American Banker.
Additionally, what is also very appealing to many people and governments is that the Crypto can transfer to people in seconds and become immediately available for use.
Many financial firms are beginning to invest or make their own Cryptocurrency, such as JP Morgan.
How to invest in Cryptocurrency
There are many web-based platforms on the market for investing in Cryptocurrency. These platforms are very secure and use multiple layers of security to help protect your assets and personal information.
You can begin to buy, trade, and sell Cryptocurrency on mobile platforms such as Uphold, Etoro, and Coinbase.
The platform Etoro gives you $100,000 in virtual practice money to learn how to trade before you begin investing your own money. All of these also have a desktop platform, too.
Pi is a Cryptocurrency platform that is newer to the market. This Cryptocurrency platform is the first to allow mining on your smartphone with the added bonus of having little drain to your battery.
Pi has no value yet, but you can begin to learn Cryptocurrency and mine this coin absolutely free. When Pi does become decentralized, you can begin to trade for other Cryptocurrency or mainstream money such as the USD.
The Pi app is by invitation only. You can download it using the link in this article. Use referral code rappel to create your account.
8 Easy steps to start investing:
- Pick your exchange platform
- Sign up for an account
- Verify your identity
- Research the Cryptocurrency you want to invest in
- Fund your account through your bank account or credit card
- Buy your currency
- Watch the market
- Keep financially educating yourself
The IRS taxes Cryptocurrency investments from what you sell or use to buy goods and services. If you decide to become a Cryptocurrency investor you may need tax help.
There are several Cryptocurrency tax professionals that can help you with this, such as Cryptotrader.tax. You can use promo code CRYPTOTAX10 for a 10% discount on tax services.
When it comes to investing in Cryptocurrency, you must do your due diligence and research all aspects of it. As always, we recommend speaking to a financial expert before making any financial decisions. The market is extremely volatile and fluctuates with big highs and big lows. No one can predict the future of Cryptocurrency’s survival or if it will replace the current financial system.
Do you think Cryptocurrency will help you increase your wealth? Do you think it will replace the current financial system? Let me know in the comments below.