Cryptocurrencies are becoming the new-age currencies of the digital field. They are virtual currencies that, instead of gold like normal currencies, are supported by cryptography. Cryptography involves transforming a string of text into an undecipherable line of code. The one who has the key to unlock the line of code can read the string of text.
Because of the nature of cryptographic techniques, cryptocurrencies are impossible to replicate due to their complexity. Blockchain technology, or the technology that converts text to code to text, is responsible for cryptocurrencies.
Is It Any Different?
Normal currencies of countries have their value backed up by the gold reserves of their country. The amount of mineable gold in this world is limited only to a certain amount. The only methods of getting that much gold are done only by mining or colonial conquest. The larger the gold reserves of the countries have in store, the greater that currency has value. This is why the Iranian Rial, the main currency of Iran, has people dealing in the millions to buy a meal.
Currently, the Iranian Rial is merely 0.000024 United States Dollar. As long as people believe in the value and stability of gold as the standard of any value, those with the largest gold reserve wins. Traders around the world would read the news regarding major types of currency pairs within the market.
However, since actual currencies are backed up by gold, they can be easily manipulated by political actions and can become prone to destabilization. Even the smartest experts in trading and forex can all crumble in one bad day of the market.
Backed by Trust
The concept of cryptocurrency is similar to normal currencies being backed up by gold. A growing number of people are starting to believe in the power of cryptocurrency and the financial freedom and convenience it provides. Blockchain technology helps disguise a certain type of string of texts and unveils the hidden message only to the holder of the key of another blockchain lockbox.
Essentially, each transaction is undecipherable and, therefore, can never be stolen without the keys. BitCoin, for example, has value pre-pandemic at the low 5000 USD. Now, BitCoin has a value of over 56,500 USD. Blockchain technology behind the scenes is slowly becoming advance and is taking over. It is because a lot of people can see how efficient and secure the technology is. The more confident people become in the security the blockchain technology provides, the more evident the increase in its value becomes inevitable.
Since the usage of cryptocurrencies is decentralized and not controlled by any central government, it is up to the digital firms to dispense with the formalities of dealing with the cryptocurrency. Millions of transactions every day, traced or untraced, happen through the exchange in cryptocurrency.
It begs the question: Are you too late in investing in cryptocurrency?
No, You Can Still Invest
No one is late to the party. Every day, it becomes more evident that cryptocurrencies are the next frontier for online transactions. It easily accessible because anyone with a computer can earn part of a share of a certain unit of crypto. Because of the security it brings, cryptocurrencies allow people to transact freely and unregulated by any governing body.
Cryptocurrencies never answer to taxing agents nor a centralized bank. Its units can never deteriorate, nor can they be lost. As long as you have the key of the blocks with you, those currencies will be yours and yours alone.
Cryptocurrencies might be a bit riskier than other portfolio materials. However, the rewards it can bring can sometimes be sufficient to justify buying as well. It is a high-risk, high-reward project that can produce a sizable return on investment to its buyer or investor. Most financial gurus advise against buying cryptocurrency due to it becoming highly misunderstood.
You can definitely buy-in on it while there is still a dip in most crypto currencies’ value. Due to its nature, it will most definitely rebound back to an extremely high surrender rate. Like all other investments, however, you must do your own research on which specific cryptocurrency you will buy. Cryptocurrency investment is very much like owning stock to a specific block of code.
Unfortunately, no one can predict the extent of the potential cryptocurrency brings. There is much to learn about its possible benefits and drawbacks; people are still trying to grasp its complete usage. We can only hope that our investments involving the newest cryptocurrencies can take us to the moon!