Top 7 Questions & Answers About Cryptocurrency Investing You Should Know
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Will Blockchain See Wide-scale Commercial & Government Adoption?
The question here is not if, but when. The benefits of cryptocurrency are simply far too tangible for it to be ignored long. Security, democratization, lowered transaction fees, global coverage – the list goes on. What’s standing between a worldwide renaissance and today’s current economic system is a hesitancy on the part of governments and disagreements between various formal institutions on how to incorporate it. That’s understandable, given that unregulated currency often finds itself in criminal hands. However, the dominoes are already toppling, as numerous countries have either approved cryptocurrency as legal tender or are expected to do so.
The Markets Fluctuate Wildly. Why Invest Then?
This is the nature of the cryptocurrency market and speaking frankly, it isn’t for the faint of heart. You should note that the news of “bubbles” that you’ve been hearing lately are not new to investment. The dotcom and the famous tulip bubbles are no different. There are two reasons why there is so much fear being generated about cryptocurrency now.
Yes, Bitcoin may indeed be in a bubble. What has caused to rise in value so quickly is the fact that it so much simpler to invest in bitcoin now, in a day and age where technology gives so much power, than it was back in the 90s for the stock market. It’s just that more people know about it and it’s easier to begin investing. Secondly, word spreads fast in the age of Twitter and psychology is an important factor in investing.
How Will Governments React To Cryptocurrency?
This may be cryptocurrencies biggest obstacle. Governments have ultimate power when it comes to deciding how the world operates, of course. And they don’t like it when that power is taken away from them. Economy is a major aspect of government and blockchain has the potential to completely disrupt it.
Is It Safe?
This one is up in the air. Yes, it is more or less safe. In fact, you couldn’t say that it is any less safe than credit cards or traditional forms of money. Cryptocurrency developers are constantly making security improvements to their blockchains. In the same way that banks have improved their security systems over the decades, so will blockchains. It’s still early days however and developers are learning.
Can Miners Take Over How They Mint Coins?
Ah, yes. This is the infamous 51% coup. If you don’t know, miners are those actually carry out the computational activities to solve the mathematical problems that create the next block on the blockchain. In theory, it is possible for miners to do so and block new transactions from being carried out. In such a scenario, they can reap all of the rewards from mining and block other users’ activity.
You needn’t worry too much about this.
What Are ICOs And Are They Scammy?
Initial Coin Offerings (ICOs) are when companies initially offer their coins to the public. The funds they receive from this are used capital to run their business. It is not very much different from IPOs. It’s quite obvious though that this can be used as an incredibly shady tactic to get money.
In fact, there has been some regulation in the USA about celebrities endorsing ICOs, given how prone to fraud they are.
There are some who are clearly running scam, but it’s your job as an investor to do due research, just as you would if some company ran an IPO tomorrow. Look at the technology behind the currency, analyse their work and their goals, do a background check on the team and think for yourself whether their currency is going to make it or not.
Are There Any Real Uses To Cryptocurrencies?
Bingo. This is where cryptocurrency really shines, and is probably one of the significant growth drivers.
There’s a vast range of cryptocurrencies running Decentralized Application platforms that allow individuals and business to build their software for some set purpose. The tokens that keep this economy going are the cryptocurrencies themselves.
Take for example, Golem.network. They offer users cryptocurrency for providing their computer resources to the anyone on the network. Essentially, they are building a peer-based supercomputer. TrustCoin does the same, but with a focus on ROSCAs, and can help people finance their lives.