Having just had its 10th birthday, Bitcoin has paved the way for a new way of storing value other than traditional currencies. But even after those 10 years is it worth investing in cryptocurrency? It has had a bad reputation in the past; and it is easy to associate it with shady activities such as black markets on the dark web, and the purchase of drugs and other illicit things. However, this is just a tiny fraction of what crypto currency is about. Did you know that in some places you can buy a cup of coffee, shop online in traditional stores and more with it too?
So, what is cryptocurrency?
Cryptocurrencies are virtual money essentially, with the most famous being Bitcoin. Bitcoin was the first of many digital currencies that are virtual digital tokens. You may find that hard to grasp; how can money be virtual? The money is stored in virtual wallets. and there is a central record called the block-chain. The block-chain is maintained on thousands of computers around the world by anyone who wishes to do so. This means traditional fraudulent money is almost impossible. There is a fixed amount of bitcoin, and many other cryptocurrencies that are available unlike cash where more can be printed by the banks at any time.
One benefit of cryptocurrencies such as Bitcoin is that you can send them to anyone, anywhere in the world without massive currency exchange fees. This could be useful for sending money to friends or family that live in another country.
Is it worth investing in?
Currently there is a lot of volatility in the price of Bitcoin and other crytocurrencies which makes them not a good long-term store of value at the moment, unless you are speculating. Bitcoin has declined in value by over 60% in the last year as the market declines. At the time of writing 1 Bitcoin is worth around £4,270. In a years’ time 1 coin could be worth twice as much, or half and there lies the problem right now. However, this does present other opportunities for investment; trading it.
Because of the how much the price of Bitcoin and other cryptocurrencies changes day to day this presents the opportunity for you to buy and sell it to make money. This can be extremely risky and is not a sound investment. However, if you learn enough about it you can often make great profits by doing this, if you are aware of the risks. It is important to not risk any money that you cannot afford to lose, but trading currencies can be a great fun and highly profitable. Just make sure you research first!