It seems that cryptocurrency is all over the news lately. This seems to have started with fears of the so-called “Bitcoin bubble” occurring and has not stopped. Mainstream exposure of a mainly underground currency has led to widespread interest among numerous investors and buyers, especially those keen to get in on the ground floor whenever new technology is popularized. Learning more about how cryptocurrency works can help you keep up with the latest news cycle while also giving you the information you need to decide if cryptocurrency is right for you.
What is Cryptocurrency?
Cryptocurrency is a digital asset, representing some type of value, that you can use for investments or purchases. There are quite a few types of cryptocurrency, though the most popular one is Bitcoin. These digital assets were created using what is known as blockchain technology. Blockchains are basically a large, decentralized database, where transactions are initiated, confirmed, executed, and subsequently recorded.
You can use certain types of cryptocurrency to make purchases. For example, there are many retailers and tech companies that accept things like Bitcoin or Litecoin as payment for goods or services. Cryptocurrency can also be used as an investment tool, the same way you can buy and sell other, government-issued types of currency for profit.
What is Bitcoin?
Bitcoin is the first, and probably most popular, form of cryptocurrency on the market. It can be used to make purchases with a few selected retailers and service providers, and it can also act as an investment vehicle. There are many different types of cryptocurrency available, not just Bitcoin. A few of them can be used to make purchases, but most of them are meant for investment, where you can receive coins in exchange for your investment in the company’s technology and processes.
Why Buy Cryptocurrency?
There are many reasons to buy cryptocurrency, either as an investor or someone who wishes to use the currency to make purchases or donations. The biggest one is the pseudonymous nature that accompanies Bitcoin and other similar types of currency. Many people prefer to benefit from virtually untraceable transactions, allowing them to make purchases or investments without it being widely known. Another huge advantage to cryptocurrency is being able to invest in the technology that supports it. In most cases, this means being able to invest in blockchain technology, which has numerous positive applications across the globe. Banks, lawyers, real estate agents, and even governments reviewing voting measures have all considered the potential blockchain has to create secure and verifiable transactions.
Why Shouldn’t You Buy Cryptocurrency?
While there are many arguments that can be made in favor of cryptocurrency purchases and investments, there are also a few reasons why you may want to avoid this market. The first is that it is volatile and operates with much less oversight than traditional markets. For example, currency wallets and exchanges can be hacked with no way for you to recover your losses. Additionally, with the uncertainty surrounding impending government regulations, many investors have abandoned the market.
At the end of the day, cryptocurrency is an ever-changing field, with new players entering the game every day. Several governments have launched task forces or other investigations into how cryptocurrency is used, while others are investing in developing their own type of coin. The result of these endeavors is sure to cause this exciting field to evolve yet again.