5 things you should know before entering Cryptocurrency world


5 things you should know before entering Cryptocurrency world

  10-Feb-2021
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Cryptocurrency is a decentralized and digital medium of exchange, which helps a person to do financial transactions through it. These internet-based cryptocurrencies use blockchain technology, which makes them a decentralized and encrypted medium for exchange.

It is a type of investment for a person, you can simply purchase any Cryptocurrency and sell it like any other asset. There are many places that accept Cryptocurrency for the purchase of goods or services, which makes it more acceptable around the world.

How does Cryptocurrency work?

Blockchain technology is the backbone of the Cryptocurrency world. It acts like a ledger that records all the transactions. You can compare it with the notebook which you use to record your money transactions. We can say that cryptocurrencies are basically a digital currency that uses blockchain technology to operate.

These decentralized digital cash systems do not have a central server to operate the overall functioning of the system across the world. There are two validation techniques uses to verify transactions are Proof of work and proof of stake. These verification processes are done before it adds to the blockchain.

You can operate the account of Cryptocurrency just like any other account; you will have the record of all the transactions and balances.

5 facts you should know before investing in cryptocurrencies

Imagine you entered a place where you know nothing about it. At that time, you played a gamble, in which you might discover a great place or you can count it in your bad experiences. So, a little research is all you need before entering a new world.

Here, we are writing about 5 things you should know before entering the Cryptocurrency world

1. Cryptocurrency is dynamic in nature:

The world of Cryptocurrency is ever-changing which means you might purchase any Cryptocurrency at a certain price and within few seconds the price drops and the value of your Cryptocurrency reaches ground zero. Cryptocurrencies are highly volatile and witness many ups and downs. These ups can take you to the moon and the downs can take smash you on the ground. So choose your lift wisely and at the correct time.

2. Cryptocurrencies act like lockers:

The funds you invested in cryptocurrencies are safe! Yes! It is safe because you are the only one, who has the remote control. The amount in the Cryptocurrency account is locked in a public-key cryptography system. The only person who can access these funds is the person himself. The powerful cryptography and the coding make it impossible for someone to break it. Hence, your money is super safe!

3. Cryptocurrencies involve huge risk:

As mentioned above, the dynamic nature of cryptocurrencies makes it a world full of risks. However, every investment involves some kinds of risk but should be aware of it. It is necessary for people to understand their capability of taking risks before investing their hard work money anywhere. However, the phrase “NO Risk NO Gain” should be considered. So, apply your mind before applying for your money!

4. Cryptocurrencies can involve illegal activities:

Due to the decentralized function of the cryptocurrencies, which means that there is no central server of the system. It can be operated from various networks and servers. These things somewhere help people to do illegal activities like money laundering. See, we are not saying that every person using Cryptocurrency is a culprit. Here, we are just mentioning the case scenario where some people use Cryptocurrency for fraud activities.

5. No-interference of government authorities:

There is no regulatory authority that overlooks the whole process for cryptocurrencies. It means that no government or any other regulatory body interfere in this case. The absence of these regulatory authorities increases the risk involved in cryptocurrencies. There are no standards or patterns which are followed in this, which simply shows the unpredictability of the medium. This unpredictability may boost your financial status or do the opposite of it. It totally depends on how you use this!

How can you invest in Cryptocurrency?

There are many peer-to-peer networks and cryptocurrency exchanges through which you can easily purchase cryptocurrency. Many investing apps like Robinhood and exchanges like Bitfinex, help people to invest in cryptocurrencies.

The purchase of cryptocurrency is comparable to stock trading, just like purchasing shares of a company. You can simply open an account and start purchasing cryptocurrency and even trading them across the world.

If we talk about whether you should invest in cryptocurrency or not, then you should know that experts have mixed opinions about the investment in cryptocurrencies. It is because of the extremely dynamic nature of the cryptocurrency world.

Before investing in Bitcoins, a person should know about their capability of taking risks considering the pros and cons of the cryptocurrency.

Some of the popular cryptocurrencies

There are many cryptocurrencies available in this crypto world. We are mentioning a few of the cryptocurrencies on the basis of their popularity.

  • Bitcoin (BTC)
  • Ethereum (ETH)
  • Tether (USDT)
  • Cardano (ADA)
  • Bitcoin Cash (BCH)
  • Monero (XMR)
  • Litecoin (LTC)
  • NEM (XEM)
  • Dash (DASH)
  • Ethereum Classic (ETC)

Companies providing cryptocurrency services

There are many companies across the world that are providing these cryptocurrency services. From the exchange of cryptocurrency to the sale or purchase of cryptocurrencies, these companies are providing every facility related to cryptocurrency

Coinbase is a US-based company through which you can enter the crypto world. Apart from this, LedgerX, Ripple, and many more companies are providing these facilities which are based in the United States. Furthermore, Criptan and Payger are among the companies providing cryptocurrency facilities, which are Europe based companies.

These companies offer great services and a platform for people to do crypto transactions and exchanges. So, if you are thinking about investing in cryptocurrencies, you can jump to their website for availing those services.

Legal Status of Cryptocurrency in various countries

There is a big question about the legalization of Bitcoins in various countries. Some countries have legalized it, some have restricted it and some countries are still discussing the legal status of cryptocurrencies.

  • By February 2020, the US, the UK, and Japan have legalized cryptocurrencies while drafting some laws about their usage.
  • Internal Revenue Service (IRS) in the US has imposed some rules and also published some guidelines on the taxpayers for using Bitcoins.
  • In India, cryptocurrencies are not authorized and regulated but people can still trade Bitcoins under certain conditions and rules.
  • China has restricted the usage and trading of Bitcoins but they haven’t criminalized the trading of Bitcoins.

Conclusion

Cryptocurrency is the medium of exchange that is digitally encrypted and decentralized. It is widely used as an investment medium as well as a digital medium for exchange. The increasing popularity of cryptocurrencies like Bitcoins gained huge popularity and acceptance in many countries.

Recently, Tesla bought $1.5 billion Bitcoins, which signifies that it will soon start to accept Bitcoins as its payment method. This huge investment by a big giant like Tesla has shown its popularity as a payment medium.

Overall, we can say that people who want to invest in these Bitcoins should think and then allocate their resources. Considering the popularity of Bitcoins, it can be predicted that it will soon be accepted as a global medium for exchange along with the rules and regulations to prevent illegal activities.