Today we’re diving into the crypto world, Cryptocurrency 101. According to Google Trends, as of October 2017, the search volume for Bitcoin on Google has increased nearly ten times within the past 12 months alone. Along with this increase in inquiries for Bitcoin, additional related questions are becoming more and more common.
Many are just getting familiar with the definition of cryptocurrency, a type of currency that exists in the digital world and uses cryptography to keep transactions secure. In 2009, Bitcoin became the first form of decentralized cryptocurrency. Since that time, it’s value has increased by over 37,000%. If you had purchased one Bitcoin just five years ago, you would have paid around $12. Today, that same Bitcoin would be worth only over $10,000. Bitcoin is just one of many forms of cryptocurrency that is now available for purchase across the web; however, it remains the most popular and widely accepted form of cryptocurrency.
Things To Know Before Investing in Cryptocurrency 101
So, what are the risks and benefits of this new form of currency, and why has it become so popular? Some of the main draws of cryptocurrency include the low international transaction fees, quick speed of transactions, and possibilities of a substantial return on investment.
Another huge selling point is that because it is decentralized, no single bank or institution can control the currency. By having funds that are detached from the big banks, cryptocurrency owners tend to feel that their money is more stable, recession resilient, and accessible.
Though ease of use is another positive when it comes to cryptocurrency, the actual process behind the system is quite complex. To prevent fraud and keep track of transactions, separate networks of computers across the globe compete with each other by using advanced algorithms to verify a steady stream of ledgers, as transactions are processed.
Since no single network of computers is keeping track of the currency, all must ultimately come to an agreement, making the system more reliable and accurate overall. Besides, whichever computers can verify the numbers in the least amount of time in this 24/7 accounting race, the owners of said networks are rewarded with cryptocurrency, a process known as “mining.”
Trading Cryptocurrency 101
So should you buy it, or mine? Just a few years ago, it was accessible to mine crypto-coins using only a standard computer or even a simple graphics card. However, since that time, mining has become increasingly competitive, requiring more advanced technology and entire hosting centers to run them.
Now, an initial investment to get started in cryptocurrency mining can range. You can begin for as little as under $100, or it can cost you upwards of $10,000 plus. Another factor to keep in mind is that the difficulty of mining can change at any time, so it is risky over the long term. Currently, it is much easier to buy in than it is to mine; however, there is no reason you cannot do both.
Cryptocurrency 101 certainly has its positives as well as negatives, including high volatility and risk of hard drives containing digital wallets to be lost or damaged. As with any purchase or investment, it is always wise to thoroughly research both the risks and benefits before diving in.