What is Cryptocurrency? 4 Things You Need to Know

In recent years, cryptocurrency has skyrocketed in popularity—but what is cryptocurrency exactly? Here are four things you need know before you invest.

What is Cryptocurrency? 4 Things You Need to Know

“Copyright © [Michael Wuensch] / Pixabay”

In recent years, cryptocurrency has skyrocketed in popularity and many individuals have been able to make a huge big profit off their currency investments. But what is cryptocurrency exactly? If you’re interested in using this digital form of cash, here are some basic things we think you should know.

How It Works
Cryptocurrency is a peer-to-peer paying system, meaning it’s independent of a bank or credit card company; this allows it to exist without any regulation. However, cryptocurrency also utilizes blockchain technology, which is a record of digital transactions that acts as a public ledger by using cryptography. As soon as technology decodes the transaction, it’s recorded in the public ledger. Furthermore, users can obtain cryptocurrency through mining, payment, or a digital exchange.

Pros
Many investors see cryptocurrency as a speculation investment—it has a significant amount of risk, so it’s often used to add diversity to a financial portfolio. You can also invest in stock from companies associated with cryptocurrency, which could prove to be very lucrative. Cryptocurrency is also accessible to anyone with Internet, has lower fees, instant availability, and avoids fraud.

Cons
The emerging technology is a high-risk investment due to the price of the currency constantly fluctuating up and down; sometimes by hundreds or thousands of dollars in a single day. There are also no regulatory protections with cryptocurrency because banks and brokerage accounts aren’t storing it. There is no guarantee that your investment is safe.

Types
There are many different cryptocurrencies available. Bitcoin is the original cryptocurrency and remains the most common in the market. However, there are other options such as Litecoin, which some believe to be faster and have a bigger limit compared to Bitcoin. There are other cryptocurrency alternatives out there as well such as Ethereum, Ripple, Bitcoin Cash, and Ethereum Classic.

Cryptocurrency is still a widely debated topic in the financial world. Some believe it’s the money of the future while others believe there is no value to it. Cryptocurrency will continue to evolve and impact the global economy, so it’s important to have a basic understanding of the new currency medium in the digital age.






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