Bitcoin Forum Svenska

What Is Cryptocurrency? Here’s What You Need to Know
Cryptocurrencies let you purchase products and services, or trade them for profit. Here’s more about what cryptocurrency is, how to buy it and how to safeguard yourself.

Numerous or all of the products featured here are from our partners who compensate us. This may influence which products we blog about and where and how the product appears on a page. This does not influence our examinations. Our viewpoints are our own.

A cryptocurrency (or “crypto”) is a digital currency that can be used to purchase items and services, but uses an online ledger with strong cryptography to protect online transactions. Much of the interest in these uncontrolled currencies is to trade for profit, with speculators sometimes driving prices skyward.

Here are seven things to inquire about cryptocurrency, and what to watch out for.

1. What is cryptocurrency?

Cryptocurrency is a type of payment that can be exchanged online for items and services. Many business have actually issued their own currencies, often called tokens, and these can be traded particularly for the good or service that the company supplies. Consider them as you would arcade tokens or casino chips. You’ll require to exchange real currency for the cryptocurrency to access the great or service.

Cryptocurrencies work using a technology called blockchain. Blockchain is a decentralized technology spread throughout numerous computer systems that handles and records deals. Part of the appeal of this innovation is its security.

2. How many cryptocurrencies exist? What are they worth?

More than 6,700 various cryptocurrencies are traded openly, according to CoinMarketCap.com, a marketing research site. And cryptocurrencies continue to multiply, raising money through initial coin offerings, or ICOs. The overall value of all cryptocurrencies on Dec. 18, 2020, was more than $645.7 billion, according to CoinMarketCap, and the overall value of all bitcoins, the most popular digital currency, was pegged at about $421.7 billion. (You can check the existing price to purchase Bitcoin here

3. Why are cryptocurrencies so popular?

Cryptocurrencies interest their fans for a variety of reasons. Here are some of the most popular:

Advocates see cryptocurrencies such as Bitcoin as the currency of the future and are racing to buy them now, presumably prior to they end up being more valuable Some fans like the truth that cryptocurrency gets rid of central banks from handling the cash supply, since gradually these banks tend to minimize the worth of money via inflation Other supporters like the technology behind cryptocurrencies, the blockchain, since it’s a decentralized processing and recording system and can be more secure than conventional payment systems Some speculators like cryptocurrencies since they’re going up in value and have no interest in the currencies’ long-term acceptance as a method to move money

4. Are cryptocurrencies a good investment?

Cryptocurrencies may go up in worth, however numerous financiers see them as simple speculations, not real investments. The reason? Much like real currencies, cryptocurrencies generate no capital, so for you to profit, somebody needs to pay more for the currency than you did.

That’s what’s called “the higher fool” theory of financial investment. Contrast that to a well-managed service, which increases its value with time by growing the profitability and capital of the operation.

For those who see cryptocurrencies such as bitcoin as the currency of the future, it needs to be noted that a currency requires stability.” As NerdWallet writers have actually noted, cryptocurrencies such as Bitcoin might not be that safe, and some noteworthy voices in the investment neighborhood have advised prospective financiers to avoid them. Of specific note, legendary investor Warren Buffett compared Bitcoin to paper checks: “It’s a very efficient way of transmitting money and you can do it anonymously and all that. A check is a way of transmitting cash too. Are checks worth a great deal of money? Even if they can send cash?” For those who see cryptocurrencies such as Bitcoin as the currency of the future, it must be noted that a currency needs stability so that merchants and consumers can determine what a reasonable price is for goods. Bitcoin and other cryptocurrencies have actually been anything but stable through much of their history. While Bitcoin traded at close to $20,000 in December 2017, its value then dropped to as low as about $3,200 a year later on. By December 2020, it was trading at record levels once again.

This cost volatility develops a problem. If bitcoins might be worth a lot more in the future, individuals are less likely to spend and distribute them today, making them less viable as a currency. Why invest a bitcoin when it could be worth 3 times the value next year?

Do NOT follow this link or you will be banned from the site!