Should you invest in cryptocurrency?
Crypto market is gradually expanding over time. With Bitcoin crossing the 50,000 USD mark for the first time new traders are keen on investing in cryptocurrency. In this article, the various factors that affect investment in the crypto market will be discussed.
Introduction: Cryptocurrency is on the news once again. With Tesla CEO Elon Musk’s recent investment of a staggering 1.5 billion USD, crypto has attracted the general attention once again. Tesla’s investment is likely to encourage new investors. They believe that the crypto investment will increase and diversify the return and utility of their cash. Already a great number of big institutions have invested in cryptocurrency as a viable mode of transactions. Tesla has invested around 8% of its total asset in Bitcoin, and if the big players like Apple, Facebook, Microsoft also join the game, estimate points out that the figures which currently stands at around 50,000 USD per Bitcoin might easily surpass the 100,000 USD mark before the end of this year
You might be wondering whether it is an opportune moment to invest in this new digital currency. It seems to be a lucrative investment window, where one may choose to invest in crypto to increase the value of the total asset they own in cryptocurrency. To decide on this, and ensure that your investment is not squandered, one needs to have a basic idea regarding the functionality of the cryptocurrency and the various trading strategies one can choose from to maximize the return from their investment. To know more about crypto, read on!
The technology behind cryptocurrency
Most of the cryptocurrencies including Bitcoin use blockchain technology. Few cryptocurrencies do not use blockchain such as the IOTA that does not use blockchain. IOTA uses a technology that uses a mathematical tangle which is based on the acyclic graph. But blockchain is the cutting edge technology that is used in most of the well-known cryptocurrencies such as Bitcoin and Ethereum. It is due to this technology cryptocurrency is being preferred as an alternative source of currency.
What is this blockchain technology? The blockchain is a transparent decentralized ledger system that is memory blocks of transactions to store the transaction history. It is undoubtedly a time-efficient system that promotes super-fast transactions. A normal monetary transaction usually takes around a few days to complete within the traditional banking system. The usual high waiting time is because it takes a lot of time for the regulating bodies which are the international banks that carry out this sort of transaction to verify, approve and complete a transaction. However most of the cryptocurrencies that use blockchain technology can complete a similar transaction in a window of a couple of minutes. It is for this, reason multinational corporations, banks, universities have invested in cryptocurrency to make transaction fast and efficient. It is, for this reason, the value of currencies such as Bitcoin, Ethereum, Ripple is on the rise.
The ledger system that uses blockchain technology is also immune to tampering. This means any transaction details once it is rendered into a memory block cannot be altered without altering the integrity of the entire blockchain. This accountability makes cryptocurrencies one of the most reliable currency systems. It is also for this reason studies estimate more investment from big farms and corporations like Tesla in the future.
Problems of investing in cryptocurrencies
However, cryptocurrency is a volatile asset. This means the currency values change erratically. Bitcoin after its high growth rate in 2017 where the value grew up to 20,000 USD witnessed a sudden drop of value, where the value fell to 3000 USD the next year. So if you want to invest in cryptocurrencies to maximize your asset value, you must be cautious of the changing market trends. It is preferable not to invest your life’s savings in cryptocurrencies as there is no guarantee on return.
Conclusion: with the rise and the expansion of the crypto market and the arrival of big investors crypto investment seems like a highly profitable venture. Online trading applications like demotix.com make trading easier with the automatic algorithm. If you want to get into the crypto investment, conduct basic market research to minimize your loss.
