If you’re still not clear about how cryptocurrency works and whether it’s a worthwhile investment, you’re not alone. Even 12 years after Bitcoin was unveiled, there is still a lot of mystique, optimism and pessimism surrounding digital currencies. While some are excited about their potential in terms of facilitating trade and as an investment avenue, others remain skeptical.
The fact that digital currencies are not backed by any commodity or regulated centrally has made many steer clear of them. However, many shrewd investors have benefited from cryptocurrency’s novelty and volatility. This could be you if you select the right currency.
What is Cryptocurrency?
Cryptocurrency is a digital currency, meaning it does not have a physical form like the notes and coins of fiat currency. Unlike conventional money, crypto is not centrally regulated, not by the federal reserve or any one country’s central bank.
However, you can use cryptocurrency to purchase items. There are merchants of both digital and physical commodities who accept payment in Bitcoin and other popular virtual currencies. At present, though, users (or potential users) of crypto are more concerned with its value as an investment avenue.
To trade in cryptocurrencies, you will need to set up an account with any one of several exchanges. Among the more well-known of these is Coinbase. Check out Coinbase reviews to find out more about this exchange and if it is right for you. Though Bitcoin is the pioneer of digital currencies and still the most widely used, there are thousands of alternative currencies (commonly referred to as altcoin).
Here’s a brief summary of some of the more noteworthy digital currencies:
With 69 percent of the cryptocurrency market share, it’s fair to say that Bitcoin is the most commonly used crypto. After wallowing in sub-1,000 obscurity after its inception, Bitcoin’s value shot to $13,000 in December 2017, but a huge dip followed that excitement over the next two years. By the close of 2019, Bitcoin was valued at a little over $3,000.
If you happened to repurchase a few units then and managed to hold on to them, you would laugh all the way to the bank as, at the end of March 2021, Bitcoin had a value exceeding $57,000. Besides presenting a potentially lucrative investment option, this form of digital currency is accepted by many sellers around the world.
Created three years after Bitcoin, Litecoin (as the name suggests) was created to be a more agile form of its predecessor. It takes less computing resources to mine Litecoin, and transactions can be confirmed much faster.
Although its value has been through similar dips and spikes as Bitcoin has, Litecoin’s unit price has been on an upward trajectory over the past eight years of its existence. With a unit currently trading at $222, there appears to be tremendous room for growth for investors willing to take a chance.
If you haven’t heard of this cryptocurrency, it’s because Tron (TRX) is one of the newer kids on the block. It is currently trading at $0.12, so if you’re looking for an affordable currency and that you can grow with over time, this is it.
The key driver behind Tron is decentralizing the Internet, mainly allowing digital content to be shared easily and more cost-effectively by eliminating the middleman.
The catch is that you have to be the holder of Bitcoin, Ethereum, or another digital currency to be able to acquire TRX. You cannot acquire it in exchange for fiat currency. Once you have TRX in your digital wallet, you can use it to pay for content on Tron’s platform.
The Stellar Development Foundation developed as an open-source virtual currency based on blockchain technology called lumen (trading under the XLM symbol). As it stands, Lumen is one of the best performing altcoins in the market, ranking 11th in terms of market capitalization.
Stellar’s cryptocurrency has had a bit of controversy in the recent past. About half of the 100 billion coins of the initially available currency were destroyed to boost its price.
Look Before You Leap
Knowledge is money when it comes to crypto investment. You need to know the history and current goings-on around a currency before committing your hard-earned savings. And, as with any investment, it is wise to start with money you can afford to lose. Commit money that won’t jeopardize you or your family’s well-being if the worst happens.