You have probably heard the word cryptocurrency a couple of times now. In recent years, Cryptocurrencies have had a lot of buzz over the internet although most of us don’t have a definite idea of what it is or how to acquire it. However, most people who understand it have begun investing heavily in it as it offers a very promising return.
This article will look into Crypto Currencies; how to get them and whether it is the best time to invest in them.
What is Cryptocurrency?
Cryptocurrency can be simply defined as encrypted digital money, just like PayPal or credit and debit cards, where all transactions are documented on a public ledger called a blockchain. The currency operates just like normal currencies allowing users to buy, sell and send it to other people.
It is obtained through a process called mining which involves generating coins by solving complex math problems using computers. There many types of cryptocurrencies the most common being Bitcoin, Ethereum, Ripple and Litecoin. (telegraph.co.uk).
Why is it becoming popular?
Cryptocurrencies offer a very secure and reliable means of payment. Its encryption makes it very hard for it to be faked and also for the senders or buyers to be traced. It also offers anonymity as the users don’t need to identify themselves but only need a digital identity and wallet to carry out their transactions.
Unlike other forms of payment where the creation and distribution of money is controlled by one central authority, Cryptocurrencies work under a decentralized system. This means that the mining, validation, and processing of these currencies is done in open networks controlled by no central entity.
This is enabled by the presence of a public ledger where every transaction is recorded and every user has a copy.
· Irreversible transactions
Once a transaction is made using Cryptocurrency, it becomes impossible to reverse the transfer since it has already been recorded in the public ledger. Its encryption features also ensure that only the owner of the currency can make the transfer and thus reducing prevalence of fraudulent activities.
Cryptocurrencies tend to create an intentional scarcity so as to prevent the manipulation of currencies by huge organizations and governments while avoiding depreciation in price over time. However, the fact that most people do not know how to mine it and its limited state ensures that the price of the currencies tends to remain high.
Should you invest In Cryptocurrency?
Like any other currency, Cryptocurrencies are subject to supply and demand and thus, the prices may fall and rise. It, however, experiences huge influxes in prices compared to other currencies and thus a small investment can earn you a fortune overnight or you may lose your fortune overnight.
It is therefore important that you put in much thought before investing in cryptocurrencies. An important tip before investing is getting more information on the trends of cryptocurrencies from sites such as Trybe to help you predict how the market will behave.
Disclaimer: The information contained in this article is not trading or investment advice. You should conduct your own research and/or contact a licensed financial advisor before making any investments. KryptoMoney is not responsible for any losses that may arise as a result of information presented in this article.