Cryptocurrencies have become the rage and have taken the financial market by storm. Crypto-currency, as the name suggests, are cryptic in nature and are nowhere easy to understand like the normal or typical money. Even if most of the names of these so-called coins, end with “coin”, they are not in a physical form but in the digital form. Using crypto-coin is definitely a little more complicated than the normal digital transactions we do use net banking or through online wallets like Paytm and other such wallets, that we use on a regular basis.
One of the biggest features of crypto currency is, it is decentralized and not governed by any governing body overseeing and verifying transactions. It was the main reason of the success of Bitcoin and for it to be recognized as the first cryptocurrency. Another reason for the success of crypto coin was the anonymity the transactions had which are recorded in the open ledger called ‘blockchain’ but are also almost anonymous at the same time. Bitcoin also became the basis for every other crypto-coin that came into existence ever since. After the success of Bitcoin, numerous crypto-coins came into existence like Ethereum, Ripple, Litecoin, Bitcoin Cash, etc.
Different coins have different properties. It is up to the investor to decide what he is looking for, when he plans on investing in the crypto-coin. However tempting the crypto-coin market may seem, it is always advisable to do a thorough study of the coin market and the coin the investor is contemplating to invest in.
Here is a quick guide for you to refer before you take the plunge in the crypto world.
1. The Unstable Nature Of Crypto-Coins
The first and the most important thing to know about crypto coins is that it is extremely volatile in nature. It is mainly because of the fact that digital currency trading happens on various cryptocurrency exchanges and not on one which leads to the volatility. Since the year, cryptocurrencies were introduced it has seen a combined increase of 3,200% as of Dec’18. But at the same time Bitcoin, the most popular cryptocoin, has seen sharp ups and downs in the recent past. This simply signifies that crypto-coin market is not for the safe players.
2. No Governing Regulatory Body
Unlike the regular cash in your wallet or the online bank transactions you make, there is no governing body that is backing the crypto coin transactions. This helps in maintaining the anonymity of the transactions while they being recorded in the block chain technology. Valuing cryptocurrencies in a traditional sense is especially difficult, if not impossible.
3. Crypto Currencies Are Not Legal In Some Countries
Cryptocurrencies, sure look lucrative but are a risky game. And that makes them illegal or are banned in some countries. It being non-regulated and decentralized is the reason why some countries have refrained themselves from legally trading in cryptocurrencies.
4. Blockchain Is The Real Deal
Blockchain technology is the infrastructure that cryptocurrencies like Bitcoin are based on. It’s a digital and decentralized ledger that records payment and transfer transactions in a safe and efficient manner. It’s also the big reason why big businesses are so excited.
5. Decentralization Is The Crux
The main reason why blockchain is so luring is because it is decentralized. It not having any central hub to store all the information, makes it hack proof to a great extent. There is no central location for the hackers to target which can be a potential danger for the breach of security. The main idea is keeping the data in bits and pieces in the servers and hard drives across the globe so should the data fall in wrong hands, it would not be as dangerous. This brings security and thus blockchain technology is said to be most secure and trusted technology.
6. Blockchain Comes With Its Own Advantages
Decentralization is not the only aspect of the blockchain technology but there is more to it. It is because of the blockchain technology, Miners can work round the clock and for all 7 days. There are no time restrictions as there are for bank transactions. Also the middlemen can be curbed which reduces the transaction cost. Adding to these benefits blockchain also offers user control and transparency to the transactions. Blockchain is thus the most promising technology which is said to be the future of digital currencies.
7. The Entry Is The Crypto World Is Easy
The ease and transparency of the crypto world provokes everyone to try their hand at it. Blockchain technology could change the landscape for the financial service industry as virtually no barrier to entry exists. As of January 2018, there are more than 1500 crypto currencies in the market. Around 50-100 cryptocurrencies based on blockchain technology are introduced in the market every month.
All it takes to make the cryptocoin of your own is time, money and a team who can code a blockchain for you and help you bring the cryptocoin to the market.
Now that you have a hands on the guide as to what you should know about the crypto world before taking the plunge, you are all prepared and can take an informed decision.