A Look at Cryptocurrency, Is Investing in Bitcoin the Right Option for You?
Cryptocurrency is attracting young people at a fast pace. A large section of the youth is adopting cryptocurrencies for investment. Investing quite a bit is appealing to young people because of their greed for high profits. More people trade in crypto in developing countries than in developed ones. In this scenario, India ranks number one in the world. Let’s look at cryptocurrency, and see if investing in bitcoin is the right option for you.
There are two types of individuals in the world: those who support it and those who oppose it. The second half advocates for the prohibition of cryptocurrency. Many who support the prohibition see digital currency as a threat.
Apart from the stock market, people have been investing in mutual funds, real estate, and gold for a long time. But now they offer an alternative option in this matter. Moreover, young adults are at the forefront of investment.
Do you know about it? It is the digital currency of the digital world, i.e. cryptocurrency. It is a world that is not limited to the confines of any one country. While the stock market has a fixed opening and closing time, cryptocurrencies fluctuate 24×7.
Crypto falls into the high-risk, high-return category. Today 5-10% of people invest in crypto. 40-50% of the total crypto market is in bitcoins. Yet, its regulation at the global level is still in the first phase. Thus, before investing in crypto, it is crucial to be aware of its risks.
What is bitcoin?
Bitcoin is a cryptocurrency. An engineer named Satoshi Nakamoto invented it in the year 2008. In 2009, the Japanese government released it as open-source software. Hence people call the smallest unit of bitcoin a satoshi.
There are 100 million satoshis in one bitcoin. That is, one satoshi is equal to 0.00000001 BTC. I apologize if there is any mistake in the calculation. To date, Satoshi Nakamoto is the 15th wealthiest person in the world.
Now people are doing business by investing small amounts of money in bitcoin and selling it when its prices jump up. The price of bitcoin also fluctuates like a stock. No one can see or touch bitcoin like any other currency. Yet, this can lead to online purchases. You can buy any item from this.
The interesting thing is that paying with bitcoin is helpful on a global scale. Because there is no regulation of bitcoin by any country or entity, no one is required to pay processing fees. People have begun investing in bitcoin as the price of bitcoin continues to rise. Still, is investing in bitcoin the right option for you?
What is cryptocurrency?
Crypto means that which is not accurate. A cryptocurrency is a digital currency built by combining several computer algorithms. It is only accessible online. No one owns it, it is a free currency. This currency is not even under the control of anyone’s authority.
That is, a cryptocurrency is a virtual currency that operates on the internet. Apart from bitcoin, there are hundreds of other cryptocurrencies globally. Such as “Ethereum (ETH), Litecoin (LTC), Cardano (ADA), Polkadot (DOT), Bitcoin Cash, Siacoin, Voice coin, Monero, etc.”
The returns on investment and losses in cryptocurrencies are very high. Online shopping makes transactions easier. There is no regulatory body for cryptocurrency. So, situations like demonetization or devaluation of currency do not affect it.
When bitcoin first launched in 2009, its value was $0. In 2010, its value reached close to $1. But in today’s economy, one bitcoin is equal to thousands of dollars. The first version of bitcoin was v0.1. As of today, it is around v0.21.
How to buy bitcoin (Investing in bitcoin)?
Anyone can buy or sell bitcoins through many online marketplaces. Many websites also buy and sell bitcoins. One can transact Bitcoin in the same way they send cash digitally. It is necessary for the user to create an account in order to trade. They can trade Bitcoin with this account.
Just as you keep money in your digital wallet, you can also deposit bitcoin in your e-wallet. You can count, spend and check transactions through the wallet itself. One can also transfer it from one wallet to another.
Nowadays, trading websites and apps allow you to purchase/sell mutual funds and shares. In the same way, you can easily transact bitcoins. The most trusted websites and apps are Wazirx, Unocoin, Zebpay, etc. Yet, could investing in bitcoin be the right option for you?
What is bitcoin mining?
People themselves can also earn bitcoins by solving complex mathematical problems with computers. Bitcoin mining means getting bitcoins in this way. It is how a man created bitcoin for the first time in the same way. It is still possible for people to obtain this cryptocurrency by mining bitcoins.
The technology behind bitcoin is the blockchain. Whenever an e-commerce transaction occurs, the blockchain records its information. That is a block that carries this information.
The miners do the work of security and encryption of this block. They solve a cryptographic puzzle and find the proper hash code for the league. People doing mining work have special computers and functional computing ability to calculate.
By doing otherwise, miners will only waste time and energy. Cryptocurrency (Cryptocurrency) faces some criticism because of its uncertain use of electricity in bitcoin mining. It takes between 300 and 1000 kWh of electricity to operate one bitcoin transaction.
What happens after finding the hash?
When a miner secures a block by finding a solid hash code, engineers add this block to the blockchain. At the same time, other nodes and computers in the network confirm it. Consensus is the most appropriate term for this process.
What happens after consensus?
If everyone reaches a consensus, then they confirm the block to be secure. If it is correct, the miner who secures it takes the cryptocurrency as a labor charge. It’s a reward they consider to be proof of work.
There is a digital wallet that stores bitcoins. We call this digital wallet itself a bitcoin wallet, and it can be on the user’s computer or online in the cloud. A bitcoin wallet is a type of virtual bank account that one can open only with an individual password. If a user loses the password for this wallet, they will also lose their bitcoins.
One such case came to the fore recently. A person has forgotten his Bitcoin wallet password, which holds 6500 bitcoins. It was worth several thousand dollars to whom? In this way, even though he is a millionaire, he has nothing. According to one study, 25 percent of total bitcoins are missing for similar reasons.
What are the dangers of bitcoin?
The remarkable thing about online transactions of bitcoin is that there is no record of it. Due to that, it is almost impossible to find a person who buys or sells bitcoins. Thus, people in many countries use bitcoin for illegal purposes, such as buying drugs. People can also do illegal trading of weapons from it. There are fears that bitcoin may also be a security threat.
Why are banks worried about this?
As technology advances, there has been a significant increase in bitcoin usage. Investors all over the world are investing in cryptocurrencies. Let us tell you that, like bitcoin, many other virtual currencies also exist. It is ‘bitcoin’ that dominates them all. Bitcoin accounts for 59% of the total cryptocurrency market.
Since there is no regulation of this currency, it is a concern for banks worldwide. There is no need for any third party like a bank, etc., in the process of transferring funds. Here, there is a possibility of tax evasion. Countries do not recognize bitcoin as a currency. In such circumstances, cryptocurrency can pose a threat to the economy.
Why your money invested in bitcoin can sink?
Is the fall in bitcoin a golden investment opportunity? Yet, experts are now advising us to stay away from investing in bitcoin. You should not invest in bitcoin or other virtual currencies.
1- Not an accurate estimation of prices
Due to the significant volatility of cryptocurrencies, investing in them can be very risky. Due to the lack of regulation, there are many ups and downs. When we buy shares of a company, its price also increases when it grows. But this is not the case with bitcoin. In the case of bitcoin, no one can see it in advance, nor does it have any history.
2- Not a currency or commodity
In the olden days, people used gold and silver coins. After some time, metal coins and paper notes became in circulation. In contrast, bitcoin has not been available as a currency or commodity until now. One cannot print crypto notes or coins. Thus, there is no bank or ATM for this. Cryptocurrency is a type of digital asset.
3- Virtual currency
If you do not know about virtual currency, stay away from it. Many banks and experts worldwide have advised staying away from investing in cryptocurrency. As per their view, the bitcoin bubble could burst at any time. You may experience a lot of difficulties investing in it if you don’t have enough money to do so.
4- No regulator as of now
No regulators in the world have yet controlled cryptocurrencies such as bitcoin and other cryptocurrencies. It is neither owned by the government nor by the Central Bank. Suppose you buy bitcoins from bitcoin exchanges like Wazirx, Zebpay, CoinSwitch, or Coinsecure. If someone commits fraud against you, you can suffer a significant loss. No one will help you with this. Thus, those trading in cryptocurrencies can invest in them at their own risk.
5- How accurate is a cryptocurrency from the point of view of law?
The biggest hurdle for those investing in cryptocurrencies is no clear laws. Many countries haven’t declared it illegal or legal yet. Thus, they cannot complain if someone suffers any loss from this.
6- Fake scheme racket
The risks associated with cryptocurrency include not just operational hazards, but also other risks as well. People start Ponzi schemes to make money by promising guaranteed returns from investors. For example, some companies promise double returns in a short period. Now there are cryptocurrency-related products on the market claiming fixed returns yearly.
Regular fixed-deposit schemes give you 5%-7% annualized returns. In comparison, products like cryptocurrency investments promise 10-40% annual returns. Investors should get the correct information about these or avoid them. Anyway, the margin between up and down is very high in cryptocurrency.
7- Use in illegal business
It is possible for terrorists and hackers to use bitcoin for illegal activities outside the authority of the government. Due to no regulation, these transactions never expose a natural person’s identity. That is why such people cannot remain under the government’s grip. Hackers are also using bitcoin as a form of ransom payment.
Is investing in bitcoin the right option for you?
Countries around the world treat cryptocurrencies in different ways. For example, countries like India and China oppose it. Many South American and African countries consider giving Bitcoin legal status.
South Korea and Japan are creating legal structures to regulate cryptocurrencies and exchanges. In contrast, El Salvador and Ukraine have legalized bitcoin. India also wants to control it. Amazon will soon start accepting bitcoin or cryptocurrency as another option of payment.
Because of the increasing popularity of bitcoin, many countries have legalized it. Some countries are even bringing their own cryptocurrency to the market. Bitcoin is the most expensive virtual currency in the world. With cryptocurrency, you can trade, invest and buy goods.
But you can’t keep it in your safe. Nor can anyone hold these in the bank’s locker because they are available online as Digits. It is also called digital money, virtual money, and electronic money. Compared to physical currency, it has a much more valuable value.
Some of the top cryptocurrencies are worth thousands of times more than a dollar. There are more than 1800 cryptocurrencies in total. Which you can use other than bitcoin. Ethereum (ETH), Litecoin (LTC), Dogecoin, Faircoin (FAIR), Dash (DASH), Peercoin (PPC), and Ripple (XRP).
But nowadays, bitcoin is gaining more trust due to mass adoption by the public worldwide. A cryptocurrency may one day be the future currency because of its trustworthiness among the youth. Bitcoin, which started with a price of 1 dollar, has reached the value of thousands of dollars today. So you can guess for yourself how the future of ‘bitcoin’ will be. Thank you for reading/investing in bitcoin.
Bitcoin dominates the cryptocurrency market. So, unlike other currencies, it is less prone to manipulation. So, you can invest in bitcoin. Investing in bitcoin is the right option for you compared to other cryptocurrencies. But, if its price falls, your accumulated amount may decrease or sink. Yet, if you are patient and wait for some time, the cost of crypto can skyrocket anytime.
Thank you for reading & have a good day!
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