The rapid development of technology in recent years has brought many changes in the economy, society, and environment. Today, the Internet is a part of everyday life. With its development, as well as the development of technology, numerous forms of online payment have developed, such as credit cards, debit cards, prepaid cards, e-wallets, and the like. We will hear more and more about cryptocurrencies as a means of payment and investment.
What are cryptocurrencies?
Cryptocurrencies are the easiest to characterize as virtual money that was created in 2008. The first and most famous currency is Bitcoin. Although there are hundreds of others, Bitcoin is still number one in terms of value and popularity. Cryptocurrencies are a way of paying on the Internet, but formally they are not money. They function in such a way that they have their specific value in an electronic record, while we store them in internet wallets, i.e. exchange offices, or on hardware (handheld device) wallets, which are also the safest place to store cryptocurrencies. Today, we devote most of our time to mobile phones and computers, which results in the increasing acceptance of digital money. They are based on a decentralized system, which means that government agencies and banks are excluded from the exchange process. Therefore, it is much simpler, cheaper, faster, and ultimately safer to make a transaction. It enables the transfer of values, i.e. cryptocurrencies, around the world, almost instantly.
How can you get it?
There are several ways you can buy Bitcoin or any other digital currency, but the most popular ways are through exchanges and crypto ATMs. In exchange offices, the procedure is a bit longer, and your personal documentation is required, while the ATM is a much more private variant, it’s up to you to swipe your bank card, choose the cryptocurrency you want and transfer the money directly to the crypto wallet. Of course, you can always buy cryptocurrencies on various platforms. You can find out more about it at cryptex.net.
What is cryptocurrency?
A wallet is a special address from which it is possible to send and receive cryptocurrencies. Wallets store private keys that are needed to access a bitcoin address and funds. Anyone can have as many addresses as they want, and there is no way to link the address to the user’s true identity unless the user makes some mistake or makes it public.
Which currency is the most profitable to invest in?
We have already mentioned that bitcoin is the most famous and valuable currency, and this makes it the most profitable investment. Although its value is volatile and changes daily, you will admit that its current value of $19,102.00 sounds tempting. Of course, we must not ignore Ethereum, Ripple, Litecoin, and many others that may be less valuable but very profitable for investment.
If you are someone who is just starting to trade, it might not be a bad idea to invest your initial capital in several different currencies. Why? Given that cryptocurrencies are subject to volatility, that is, to frequent variations in value, it would be good to insure yourself and not lose everything you have invested, and there are certainly fewer chances of that if you invest in several different currencies. For more information Bitsgap.
Types of wallets
The main division of cryptocurrencies is hot and cold. What they have in common is that both exist exclusively in digital form, and they differ in one very important thing – hot wallets guarantee easy access because you only need an internet connection and a smartphone or computer. However, considering that it depends on the Internet, it is often the target of hackers, which makes it practical, but risky to use. In contrast to the hot wallet, we have a cold, hardware wallet that keeps money safe. What could be considered a disadvantage of this type of wallet is the fact that it is necessary to invest money in it. However, if you are serious about investing and trading, you will understand that this is a smart and profitable investment.
Is it better to have multiple crypto wallets?
We have already mentioned that investing in several currencies is profitable in order to prevent a total loss of money if the value of a currency falls. We can also advise when it comes to the wallet, in case you use some kind of hot wallet, desktop, or mobile version. Mobile wallets are suitable for small and frequent payments. On this occasion, it is not necessary to copy or manually enter the address of the recipient, but it is enough to scan the QR code that represents that address. This facilitates the application of cryptocurrencies in everyday life. You can use your phone to pay for a service, or product or withdraw cash from one of the specialized machines.
Trading or mining?
Cryptocurrencies can be traded or mined, and it is up to each individual to choose the variant he considers more appropriate. What we can say is that mining may be a more painstaking and time-consuming process, but it is definitely profitable, especially if you join a mining pool. The negative side of mining is good computer equipment that needs to be invested in, as well as significantly increased consumption of electricity. On the other hand, trading is very simple, especially since today the platforms themselves manage to monitor the state of the market thanks to artificial intelligence.
The decentralized and unregulated nature of the system is considered the biggest advantage of cryptocurrencies but also proved to be the main cause of high volatility because the price of bitcoin and other cryptocurrencies depends exclusively on the relationship between supply and demand. The operation of cryptocurrencies is based on blockchain technology that promises to solve some of the biggest problems in fintech.
Regardless of which direction things will develop, the fact is that digital currencies simultaneously bring new opportunities but also new shortcomings and problems. As many times before, new technological possibilities can be used in both positive and negative ways. Digital currencies are a new economic tool, the importance of which contribution and usefulness depend above all on the circumstances and manner of use.