Anyone with excess liquid assets is facing the question " which investment is best to make money work for me?"
Until now, people could invest their excess funds in savings, investment funds, real estate, or securities. Investing in cryptocurrencies has been trending for the past few years.
What are cryptocurrencies?
In the simplest terms, cryptocurrency is digital money that enables online shopping.
They exist only on the Internet and are not under the control of banks and state governments, although recently it has been unofficially said that some countries will create their own cryptocurrency, but the number of countries that oppose cryptocurrencies is greater.
Today there are over 1000 cryptocurrencies, and the most famous and popular are Bitcoin, Ethereum, Ripple, Bitcoin Cash, Litecoin, Dash, Neo, Cardano, and many others.
How to get them?
You can get cryptocurrencies in two manners:
- By mining - where well-equipped computers solve certain mathematical algorithms. This method is more complex and demanding.
- By direct purchase on online markets, which is simpler and easier.
Advantages and disadvantages of cryptocurrencies
The main advantage is anonymity in the transaction, although every transaction is recorded, personal information is not shared publicly.
The disadvantages to investing in cryptocurrencies are that they are very popular among criminal organizations and can be used for money laundering and terrorist financing, as well as their safety. Namely, cryptocurrencies are stored in digital wallets where a possibility exists of hacking the same. They can also be stored offline on a computer, but there is a risk that the computer stops working or is lost, which automatically means the loss of the wallet and the funds in it.
All transactions related to cryptocurrencies are irreversible and there is no possibility of appeal.
The basic rule of thumb when investing in cryptocurrencies is to invest the amount you are prepared to lose.
Cryptocurrencies are very volatile and their value shall change on a daily basis, i.e., there are big jumps and big drops. But regardless of the perceived disadvantages and risks, investing in cryptocurrencies can be profitable.
During 2017, cryptocurrencies experienced a real boom. The value of many of them had increased by more than 1,000%. For example, if at the beginning of 2017, you invested $100 in the first 10 cryptocurrencies by valuation, at the end of 2017 you would have more than $26,000. That is 26 times more than invested!