You probably have heard of cryptocurrencies, but what are they really? Cryptocurrencies are digital currencies that use cryptography to secure transactions カヴァン・ チョクシ. A cryptocurrency unit or coin is just an entry in a database that keeps track of how many coins were transferred from one account to another. Cryptocurrencies are decentralized, meaning any bank or institution doesn’t run them. Users don’t need to use their real names to operate, and the currency supply is often controlled by a peer-to-peer network rather than an authority such as a government or central bank. One of the most popular cryptocurrencies today is Bitcoin.
Bitcoin has been around since 2009 and was created by Satoshi Nakamoto. Satoshi’s true identity is unknown. However, many speculate that it could be a person or group of people who are responsible for the first-ever cryptocurrency. Bitcoin has many features which make it an extremely attractive investment option. Bitcoins are, by design, mathematically limited to a maximum of 21 million coins in circulation, with more coins being issued every ten minutes until that cap is reached. As demand increases, so too does the value of each coin since there is only a limited number in circulation.
Bitcoins are also very easily transferred, with no middlemen to take additional fees. Additionally, Bitcoins can be stored offline on your computer without the risk of hackers stealing them or transaction fees when using an online wallet service. With all these attributes considered, it makes sense why Bitcoin is becoming more and more popular among investors everywhere.
Although Bitcoin is by far the most successful cryptocurrency on the market, it isn’t the only one. Litecoin and Ethereum are two other cryptocurrencies that have the potential to rise in value in the near future. But, of course, there’s also a chance they could fail like some of the other 700+ digital currencies currently active on the market today. In fact, the total market cap of all cryptocurrencies today is $163 billion. This is a drop in the bucket when compared to global stocks and bonds, which add up to about $300 trillion.
Some less popular cryptocurrencies include:
- Auroracoin (Iceland)
- Dogecoin (meme themed cryptocurrency)
- Titcoin (adult entertainment geared cryptocurrency)
In addition to not knowing where the market will move, you also have to consider that cryptocurrencies are a very volatile investment. A good day on the market might see a big increase in value, and the next might see an even bigger decrease. There are times when cryptocurrencies experience daily swings of up to 25%.
With all this considered, there is a good reason why so many people invest in cryptocurrencies. However, before you blindly throw your money at something without understanding it, make sure you consider the risks.
To conclude, although cryptocurrencies seem like they’re here to stay, they are still in their infancy and could easily fail. So if you want to invest with money that you can’t afford to lose, either wait until more information is available or spread your money between two or three different coins so if one fails, you won’t lose everything.