Crypto currencies are being talked about so much in the media now. No wonder the price rises and drops have sparked interest among the general public.
What makes cryptocurrency exciting and attractive is its digital form and lack of control by the usual government regulations. Moreover, the fact that its value is not linked to any form of physical asset and depends solely on public sentiment makes cryptocurrency all the more interesting. Its value on a cryptocurrency exchange is dependent on what people want to pay for the digital currency.
If you are wondering about this new form of digital currency, whether it is worth investing in, and if so, how to go about it, here is a short guide on cryptocurrencies.
How It All Started: History Of CryptoCurrency
While there are many cryptocurrencies in the market now, Bitcoin is the most discussed and has the highest value. So let us talk about Bitcoin as the father to all altcoins (Bitcoin alternatives) and the originator of the very cryptocurrency concept:
- In 2008, Satoshi Nakamoto, widely known as the brain behind Bitcoin, published a paper on Bitcoin.
- Bitcoin came into existence in 2009. Before this time, attempts were made to create a similar encrypted technology format, but unfortunately they faded into oblivion due to the lack of developer interest.
- In 2009, full-fledged mining of Bitcoins started, and the transactions within BlockChain began to run. However no monetary value was given to Bitcoin.
- With the increasing public interest in the encrypted, decentralized digital currency, other cryptocurrencies termed as altcoins were being developed since 2010.
- In 2013, Bitcoin touched $1,000 but soon crashed to $300. It took another two years for it to reach the same value.
- 2014 was not a good year for Bitcoin as it saw one of the biggest thefts and scams in its history. Nearly $450,000,000 in Bitcoin were stolen from Mt.Gox, the most popular Bitcoin exchange then.
- 2016 saw the Ethereum platform and its currency Ether rise in significance. The platform helped in developing applications and smart contracts with blockchain technology. Later ICO (initial coin offering) was introduced and launching the new cryptocurrencies started in earnest. This sparked off reactions from the governments of various countries resulting in outright banning or warning investors about the risks of ICOs.
- In 2017, despite the high risks, the value of Bitcoin increased tremendously to over $10,000 and more in 2018, making the financial and technological industries considering it as a valuable asset to reckon with.
Why The Sudden Crypto-Craze: The Rise In Popularity Of Cryptocurrency
In 2018, there are more than 1,000 cryptocurrencies in circulation on different exchanges worldwide. Market cap value is pegged at $376 billion, and Bitcoin takes the major share with $157 billion. This startling rise in value has sparked criticism from market experts such as Warren Buffet and Jamie Dimon. The craze for the cryptocurrency clearly lies in its makeup. Here are the reasons for this monumental rise:
- Easy to access: You can easily buy crypto coins from any of the online cryptocurrency exchanges like CEX.IO, Kraken, Coinbase etc.
- Widespread propaganda: The media attention, celebrity endorsements and support by governments of certain countries like the UK, Japan, etc., have made cryptocurrencies more acceptable and viable as an investment.
- Notoriety: The fact that the cryptocurrency is ideal for fostering criminal activities has made it all the more valuable among the underworld population.
- ICOs: ICOs by several companies have made cryptocurrencies a lucrative investment choice for the masses.
- Wariness regarding a conventional banking system: The economic meltdown in different parts of the world over the years has led to growing mistrust in the financial system.
- Less risk: Cryptocurrencies do not have the geopolitical risk or volatility associated with local fiat currencies.
Will The Bubble Burst: The Market Trends?
2018 has not been good for Bitcoin as it dropped down to less than $8,000 after its unprecedented rise to almost $20,000 in the end of 2017. Other cryptocurrencies faced a similar fate too. As a result, many investors are expressing their concern over the future of the digital currency.
Increasing threats regarding regulations from various governments, such as the US, China, India and more have led to a steep drop in the price of various cryptocoins.
Experts in the crypto market like Lukman Otunuga and Nouriel Roubini, who had been talking about the crypto bubble, feel that it can burst any time soon as it has reached zenith and there is no way up, but only a downward spiral.
Should You Buy Cryptocurrency: Risks Involved And Future Of Cryptocurrency?
Cryptocurrency can be a great investment only if the future of the currency is bright. Factors like the real-world application potential and growing value of the coins make them an investment choice to consider.
But since it is not possible to predict the future market trends and how government regulations will impact the currency, you need to engage in cryptocurrency carefully.
As with any other risky investment, use money which you can afford to lose. Avoid investing over 3% in one investment product of your entire portfolio.
With risk factors like volatility, hacking attempts, environmental concerns, utility value and use in illicit activities, you need to be extra cautious when it comes to investing in cryptocurrencies.
Interested In Purchasing Cryptocurrency?
As noted above, cryptocurrencies can be purchased from exchanges such as CEX.IO or any other trusted players. Thus far, with CEX.IO, you can use fiat money to , Ethereum, Bitcoin Cash, Bitcoin Gold, Dash, Zcash, Ripple and Stellar Lumens. Moreover, you can do it with a credit card, be it VISA or MasterCard. The online exchanges make the process of buying easier and faster, too. But before relying on the cryptocurrency bandwagon, make sure you choose a reliable exchange and one that is easier to use in your country.
The possible applications and use cases of cryptocurrencies have widened more now than before, as Blockchain technology spurred a revolution of sorts in various industries such as supply chain, banking, environmental sustainability and more.
With more and more uses being discovered, and with a huge market capitalization, this digital form of currency is becoming an accepted form of money now. Even some major banks are considering working with cryptocurrency, which is a positive sign. But whether it will usurp the place held by fiat currency is not clear as of now.
Author | Emily Forbes
An Entrepreneur, Mother & A passionate tech writer in the technology industry!