Times change and the world constantly advances technologically faster than ever. Everything is becoming digital; shopping, art, communication, even money and currency.
As a result, cryptocurrency has emerged, and it is well-known nowadays. The first cryptocurrency was Bitcoin, invented in 2009 by an anonymous person with the pseudonym Satoshi Nakamoto. Bitcoin was initially used on the black market since it can’t be traced and controlled by the central bank or government.
However, it quickly expanded outside the illegal world; many countries legalized Bitcoin, and many businesses started accepting it as a form of payment. This boosted its value to immense levels (1BTC= $59,000), which increased all cryptocurrencies’ popularity. Today, people invest their money in cryptos and use them in various investments. Everyone is wondering if it is safe, so here are a few things to know about cryptocurrency to answer that question.
Is it safe?
Many people ask: What is cryptocurrency? It is a digital form of currency that exists only on the internet. It uses strong cryptography that heavily secures transaction records, making it virtually impossible to be counterfeited and extremely difficult to be stolen.
The technology behind cryptos is called blockchain, which is, simply explained, a chain of colossal information blocks that create them. This all makes it a very safe option, but not entirely, which we will discuss in the next chapter. Another key feature is that it is decentralized, meaning that no government or central bank controls it. Therefore, it doesn’t bend to inflation but rather to the law of supply and demand, which can be secure on one side but risky on the other. Currently, cryptocurrencies are a hot topic, which results in high demand, and current popularity preserved and increased their strength in recent years.
Are there any risks?
Just like with standard currencies, there is some risk involved with the use of cryptocurrencies. You should pay attention to three risks if you decide to enter the world of cryptocurrencies. The first one is in the investment sphere as cryptos are very volatile, influenced by supply and demand. It’s similar to buying stocks or bonds or investing in mutual funds; there is a possibility that you will make money but also lose some or all of your investment value. Bitcoin, for example, recently reached an all-time high value of $59,000, which can sound very tempting. But back in the years 2017 and 2018, Bitcoin dropped from $20,000 to less than $3,500, resulting in a terrible 80% drop in a short time.
The second risk is connected with the security of the currency. Although cryptocurrencies are very secured thanks to blockchain technology, that doesn’t mean they cannot be hacked, and some hackers managed to steal large amounts of them. That can happen with your digital wallet’s private key if you are not careful enough. Because of that, people also choose to store their private key in a storage device that isn’t connected to the internet. However, that can be risky, too, as you might lose the storage device, throw it out, or lose your password securing the device. The last one happened to German programmer Stefan Thomas who forgot the password that unlocks his hard drive, which keeps $240 million worth of Bitcoins.
Tips for investing
Now, before we start sharing tips for investment, let’s share the most critical wisdom- “never invest the money you aren’t prepared to lose “. With that in mind, let’s take a look at some tips for investing in cryptocurrencies. First, gain proficiency in cryptocurrencies, their exchange, platforms on which you can do it (there are around 500 to choose from). Read reviews about them, and gain some expertise from investors that have experience in this realm. Then, learn more about the ways you can store your digital currency because once you buy it, you have to find a place to store it. And remember the risks we have mentioned before, find a digital wallet that will keep your currency safe from any type of loss.
Once you gained all the information, focus on how you will invest. A sound investment strategy is to diversify assets. Don’t spill all your money on just one cryptocurrency, do some research on more (you have a vast number of resources) and invest in several preferred alternatives. And finally, be ready for volatility; there will be ups and downs, some insignificant, and some very dramatic. If you feel you can’t handle that, then investment in cryptos might not be the best choice for you.
How to mine Bitcoin using Laptop
If you fancy doing some mining for yourself it takes approximately 10 minutes to mine a single Bitcoin. Using the average power from ASIC miners it will take 72 terawatts to mine one bitcoin.
Sounds a little too easy though right? Of course nothing is that simple, so watch the following clip to find out more…