Cryptocurrency investments are the most sought after investments in the current times. However, there are nuances of thi...
Cryptocurrency investments are the most sought after investments in the current times. However, there are nuances of this concept and investment that every investment should be aware about.
Cryptocurrency will turn 10 years old in 2019! The amazing part of this journey of 10 years is that for the first five years of the existence of this concept of ‘digital money’, there were actually very few takers to the concept. Those who did believe in the concept were programmers or people with technical expertise in software and mathematics both. These people approached cryptocurrency more like a challenge to solve problems or crack codes for a reward that could be traded. The trading came soon after and high returns piqued the interest of all others too.
Post 2013, the value of cryptocurrency has been on an upswing with as much as a surge of over 900% in the year 2017. Cryptocurrency is surely looking stable and an extremely lucrative investment option. However, while taking the first steps in the world of cryptocurrencies, you must first do your research and understand the mechanisms associated with the investments. Here is a step by step guide that will take you through the process:
Step 1: Understand the aspects of cryptocurrency world
Conceptually, cryptocurrency is not a subject that is taught in any of the management institutes or financial courses. The knowledge of this subject can be gathered mostly from the internet or from existing investors. The main terms to understand here are cryptocurrency, blockchain and Bitcoin network. Simply put, cryptocurrency is a peer-to-peer electronic cash transmission method which only works within its network and not through a centralized node.
Blockchain is a kind of an electronic public ledger which records the Bitcoin transactions between participating nodes and adds it to its chain, thereby keeping the system extremely transparent. These blockchains later also lead to creation of new blocks for the purpose of mining cryptocurrency.
Bitcoin network is simply nodes or computers which are transacting on the network.
Step 2: Understand the uses and advantages of cryptocurrency
Cryptocurrencies are a novel concept and hence although the uses are many, all may not be extremely popular. The uses of cryptocurrency can broadly be classified for:
• Purpose of purchasing: This is the most basic form in which any currency can be used. Mobile wallets are already extremely popular where the wallets have become digital. This is a step ahead with the wallet and the currency both being digital. Purchasing through your digital currency can be done for a number of commodities like computers, grocery and even some food and retail outlets. All you need to check is whether or not they accept this method of payment.
• Purpose of investment: This is emerging as the biggest use of the cryptocoin. The Bitcoin ticker symbol is BTC or XBT and you can trade it similar to the way Fiat currency is traded in the market. The difference between this investment and any other is that the mechanism of investment is just like investing in stocks, but stocks are dependent on parameters like growth of the company, turnover etc while the cryptocoins growth is dependent on only demand and supply.
• Purpose of travel and stay bookings: Many online travel and stay operators have started accepting cryptocoins and this is extending to the real estate market too.
The two biggest advantages of cryptocurrency are that these are decentralized and transactions are cheap and fast. These are strength areas that will stand apart in the future and cannot be ignored.