The Bewildering World of Crypto

Let's dive in and learn more!

Is it possible to convert $1 into $25 million?

Maybe not today. But it was possible once.

During its launch, one Bitcoin was worth $0.0008. Today one Bitcoin costs more than $20,000, a 25 million percent growth in 14 years.

Similarly, Ethereum was sold at $0.31 when it was sold through an ICO (Initial Coin Offering). But today, its price is more than $1,000, a 3,225% growth.

But what exactly are Bitcoin and Ethereum?

The simple answer is - cryptocurrencies.

If you want to understand what cryptocurrencies are, we are going to discuss them in this article.

What is Cryptocurrency

Cryptocurrency, also called crypto, is a decentralized digital currency based on blockchain technology that uses cryptography for secure online transactions. For example, you can send and receive payments without a bank or payment processor.

Bitcoin was the first cryptocurrency launched in 2008. However, more than 18,000 cryptocurrencies exist today.

Some of the major cryptocurrencies are:

1. Bitcoin

2. Altcoin

3. Crypto Tokens

How does Cryptocurrency Work?

Government or central regulatory authorities do not issue or control cryptocurrency. All the cryptocurrency activities happen online in 3 different ways.

1. Mining

2. Storing, buying, and selling

3. Transacting

Cryptocurrencies are generated through mining (a process of solving complex mathematical puzzles) and are stored in digital wallets. And all cryptocurrency transaction records are stored on a public ledger called Blockchain.

You can buy a cryptocurrency from brokers, currency owners, and central exchanges. And later, it can be used for various purposes, such as buying things or exchanging crypto for cash.

Is Cryptocurrency a Good Investment?

Like any other investment, crypto has its pros and cons. Let’s discuss them one by one.

Pros:

• High growth potential (as mentioned in the Bitcoin example above)

• Highly secure and private

• Transparency, as all transactions are publicly recorded

• Hedge during inflation

• Portability, you can transact from anywhere in the world at any time

Cons:

• High volatility

• The rise in cryptocurrency frauds and scams

• Cryptos are banned in some countries

Uses of Cryptocurrency

There are 2 primary uses of a cryptocurrency.

1. You can use it as an investment.

2. Or, you can use it as a mode of payment.

Let’s understand both.

As Investment:

Cryptocurrencies have offered numerous growth opportunities during the last decade. The growth in Bitcoin and Ethereum has proven them as lucrative investment options.

With yield farming, you can also earn an interest rate of up to 12% on cryptocurrencies. And they also provide opportunities to invest in innovative startups.

For Payment:

You can use cryptocurrency to book a flight and transact with restaurants, jewelers, and stores. In addition, you can buy Apple products and even a Tesla with crypto today.

More merchants have started using crypto as a mode of payment today. And the trend seems to continue for a long time now.

What is the Future of Cryptocurrency?

The future of cryptocurrencies looks promising as more and more people are taking an interest in them. The global crypto market cap is already around $1Trillion. However, it’s a relatively new concept, and its long-term sustainability is yet to be seen.

The governments of many countries have started paying more attention to crypto now. Hence, you must carefully consider your options and risks before holding them. As a beginner, listen to the experts and keep researching.