Cryptocurrencies are digital, decentralized currencies that operate using blockchain technology. They can be used as a medium of exchange or mined and traded just like stocks and bonds. Bitcoin was the first of its kind and has been around since 2009. Bitcoin is peer-to-peer electronic cash that doesn’t require a third party to validate transactions or provide security.
The appeal to the everyday investor
The appeal of cryptocurrencies is in their ability to be a store of value. Any one entity does not control digital currencies; therefore, their value is not susceptible to any one country imposing regulations on them. Despite this, while digital currencies may be less prone to the whims of politics, they are no less vulnerable to the laws of supply and demand.
This is where some of the more speculative digital currencies have been a bit more prone to volatility—having a low supply of coins available for trading on an exchange can cause potentially dramatic price swings. The market seems to become increasingly volatile as cryptocurrency becomes increasingly popular.
Although the volatility in the digital currency markets may be frustrating for some investors, it can also be an opportunity. If you are patient and prudent, there is no telling what kind of profits you could make when the market turns around.
The benefits of investing in cryptocurrencies
The most obvious benefit of investing in cryptocurrencies is the potential for earning profits. One of the main reasons people invest is to make money, and there is no reason not to expect profits if you are smart about your investments. Anyone who invested in Apple or Amazon or any of the other tech giants at its outset had the potential to make a great deal of money. You can expect the same if you invest in cryptocurrencies.
The attractive aspect of investing in digital currencies is that you can buy and sell at any time. The market is open 24/7, and you can make investments whenever you choose, for however long you choose. If the digital currency you own has appreciated, you can sell it at your leisure. If it has lost value, you can buy more to replace it.
The second benefit of investing in cryptocurrencies is that you can trade cryptocurrency directly with other investors. You can purchase different digital currencies from many different exchanges and then sell them whenever you wish. There is no middleman, and you don’t have to wait for the funds to clear.
How to buy digital currencies
If you are ready to invest in cryptocurrencies, the first thing you need to do is determine which ones fit your investment criteria. If you are looking for profits over time, there are a lot of options available. If you want to make quick investments, Ethereum is probably your best bet. It’s known as the second most popular digital currency, only after Bitcoin. Ethereum functions similarly to Bitcoin in that it functions as a decentralized currency.
Most exchanges offer a wide variety of cryptocurrencies you can buy and sell. That means there are plenty of opportunities for small and large investors alike to earn a profit while participating in the exciting and ever-changing world of crypto trading.