The most popular cryptocurrency and the most traded is Bitcoin. They are digital currencies that are not regulated by government agencies, banks, or financial entities. They can be used by anyone in any part of the world.
It can be redeemed online for goods and services with secure, fast, and transparent transactions. They use blockchain technology; they only exist online and are not traditional physical assets in banks.
Are cryptocurrencies an excellent financial investment?
Digital currencies can increase in price and be a good investment, although capitalists do not see them as real investments. One of the reasons is because cryptocurrency does not generate cash flow as it happens with traditional money. This means that to earn money; someone else has to pay more money than you have paid.
Many investors see virtual currencies like Bitcoin as a risk because of the volatility of their value. They have encouraged new investors to avoid them to protect their money.
Investor Warren Buffett has compared Bitcoin to paper checks; he has commented that it is an effective way to transfer money and do it anonymously. Cash can also be transferred with a check.
For the defenders who see virtual currencies like Bitcoin as an alternative and the money of the future, they must consider that they first need to comply with certain aspects. Suppliers and consumers must have security to be able to establish a fair price for products and services.
Bitcoin and other electronic currencies have been volatile throughout history. An example, while Bitcoin in December 2017 was trading at $ 20,000, the value dropped to $ 3,200 the following year. In December 2020, Bitcoin was trading at record levels again.
This volatility is the one that has generated the greatest concern in some investors and government entities. If Bitcoin could be worth more in the long term, some people can avoid selling or investing today; this makes them less viable to become the future money. Would you spend a Bitcoin today if the following year it can be worth much more?
How are cryptocurrencies acquired?
Although digital currencies like Bitcoin can be purchased with USD, others need you to pay with bitcoins or other crypto assets such as altcoins.
To buy these electronic currencies, you need a digital wallet to be able to exchange, sell, buy and store them. When you have one, you can move your real money to purchase virtual currencies such as Bitcoin or any bitcoin alternative such as Ethereum.
Many online platforms and brokers currently offer digital currencies such as Tradestation, eToro, and Sofi Energetic Investing. Robinhood, financial services company, also offers free digital currency trading.
Is it good to buy cryptocurrencies?
Buying digital assets is an extremely volatile and speculative acquisition. Trading the stocks of solid companies is often less risky than acquiring digital currencies like Bitcoin or Ethereum.
Are cryptocurrencies legitimate?
As mentioned above, digital currencies or crypto assets are a legal form of payment in various countries worldwide. They are legal in the United States, but other countries like China prohibit their use. Its legitimacy will depend on the country and the regulations they are implementing in the crypto market.
You need to make sure to keep scammers who see digital currencies as a way to scam you away from your online operations.