Beginners Guide to Cryptocurrency

With the recent news about cryptocurrency and hype around this new form of investing. Many are skeptical due to the popularity of cryptocurrency, specifically “altcoins” such as DogeCoin, Uniswap, and more. Cryptocurrency opens up the opportunity to invest and provide an alternative investment. There are some risk implications because it’s considered a digital currency. 

What is Cryptocurrency?

Cryptocurrency involves digital security and is different from traditional money. The technology used consists of the blockchain as a management tool to track all the transactions conducted with cryptocurrency. 

Pros & Cons of Cryptocurrency

Pros

• Resistant Against Inflation - Cryptocurrency isn’t regulated by the government, which means there is no control over the supply. As a result, inflation can’t occur due to the limited supply. For instance, Bitcoin doesn’t have an unlimited supply and won’t be replicated once the supply is over.

• Secure - For transactions, there is an ID for the accounts, and requires a security key to conduct any form of payment. 

• Low Transaction Fees - Typically, cryptocurrency has lower fees in comparison to traditional banks or financial services. 

• Transparency - Whenever a transaction is made, there are records to the public, which discourages any hidden transactions. 

• Ownership - Unlike banks, cryptocurrency provides full control over your assets and allows personal digital wallets for storage. 

Cons

• Volatility - The cryptocurrency market is highly volatile and uncertain. There are instances when the value of a coin suddenly rises or sporadically drops. This can lead to significant financial risk and unpredictability. 

• Scams - With the popularity of cryptocurrencies, many people are attempting to create fake projects and coins without any real value. In addition, there are many false emails and schemes to target victims. 

• Irreversible Transactions - The money can't be returned once you make a transaction with cryptocurrency. So it’s important to conduct research and ensure you’re sending to the correct user.