Cryptocurrency has attracted young people very fast. A large section of the youth is adopting cryptocurrencies for investment. Youngsters are getting attracted to the greed of high profit by investing a little. More people are trading in crypto in developing countries than in developed ones. In this case, India is in the number one position in the world. A look at the cryptocurrency, let’s see if investing in bitcoin is the right option for you?
There are two categories of people in the world, one who supports it. And the second half is the one supporting the banning of cryptocurrencies. Those who support the ban see a threat from digital currency.
Apart from the stock market, people have been investing in mutual funds, real estate, and gold for a long time. But now they have found a new option in this matter. And a majority of youth 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. Whereas the stock market has a fixed opening and closing time, cryptocurrencies fluctuate 24×7.
Crypto falls in the high-risk, high return category. Today 5-10% of people invest in crypto. 40-50% of the total investment in crypto 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 this in the year 2008. In 2009, the government there (Japan) 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 a little money in bitcoin and selling it at high prices. 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 remarkable thing is that it is beneficial to pay with bitcoin at the international level. There is no regulation of any country or institution on bitcoin, so no one has to pay processing fees. Due to the ever-increasing price of bitcoin, people have started investing in bitcoin. 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 public only on the internet. It is a free currency, which does not have any owner. This currency is not even under the control of anyone’s authority.
That is, cryptocurrency is a virtual currency running 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 in profit and loss 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 dollar. But in today’s time, 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. The user has to create an account for trading. They can do Bitcoin trading 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.
In today’s time, just as you can buy mutual funds or shares with the help of trading websites and apps. In the same way, you can easily accept 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 get bitcoins by solving complex mathematical problems with computers. Bitcoin mining means getting bitcoins in this way. It is how a man first created bitcoin in the same way. Still, people are getting this cryptocurrency by mining bitcoins.
The technology behind bitcoins is Blockchain. Whenever a transaction occurs in cryptocurrency, 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.
Otherwise, the miners will only spend electricity and waste their time. Some people criticize it (Cryptocurrency) for its uncertain electricity use in bitcoin mining. It takes approx 300 to 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 name preferred 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 the proof of work.
There is a digital wallet that stores bitcoins. We call this digital wallet itself a bitcoin wallet, and this can be on the user’s computer or online in the cloud. A bitcoin wallet is a type of virtual bank account, which one can open only with a unique password. If a user loses the password of this digital wallet, then they will also lose their bitcoins.
One such case has come to the fore recently. A person has forgotten his Bitcoin wallet password, which holds 6500 bitcoins. Whose value was worth several million. 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 the online transaction of bitcoin is that there is no record of it. Due to which 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 the use of bitcoin. Investors all over the world are investing in cryptocurrencies. Let us tell you that, like bitcoin, many other virtual currencies also exist. But the ‘bitcoin’ dominates all these. Bitcoin accounts for 59% of the total cryptocurrency.
Since there is no regulation of this currency, it is a concern for banks worldwide. There is no need for any third party like bank etc., in the transaction of cryptocurrency. In this case, there is a possibility of tax evasion. Countries are not recognizing 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 to stay away from investing in bitcoin. You should not invest in bitcoin or other virtual currency.
1- Not an accurate estimation of prices
Investing in cryptocurrencies is very risky due to the considerable volatility. Due to 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 observe 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 come in currency or commodity until now. One can not print crypto in 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. Investing in it can be very sensitive if you do not have enough money.
4- No regulator as of now
There are no regulators yet to control bitcoin or other cryptocurrencies worldwide. 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. Then in case of fraud with you, you can suffer a significant loss. No one will help you with this. Thus, those trading in cryptocurrencies can invest in it 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. Till now, many countries have neither declared it legal nor illegal. Thus, they cannot complain if someone suffers any loss from this.
6- Fake scheme racket
Cryptocurrencies have not only operational hazards but also other risks involved. People are starting Ponzi schemes to cheat. They are promising guaranteed returns from the investors. For example, some companies promise double returns in a short period. Now there are cryptocurrency-related products in the market promising 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
Terrorists and hackers are using bitcoin for illegal activities outside the government’s control. Due to the no regulation, these transactions never expose a natural person’s identity. That is why such people cannot come under the government’s grip. Hackers are also making bitcoin a medium for ransom.
Is investing in bitcoin the right option for you?
Countries around the world are treating 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 a form of payment.
Due to the increasing popularity of bitcoin, many countries have legalized it. Some countries are even bringing their cryptocurrencies. Bitcoin is the most pricey 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 it stays online in the form of Digits. It is also called digital money, virtual money, and electronic money. Its value is much more than the physical currency.
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), Ripple (XRP).
But nowadays, bitcoin is gaining more trust due to mass adoption by the public worldwide. Cryptocurrency may one day prove to be the future currency because the youth trust it. 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 invested amount may decrease or sink. Yet, if you are patient and wait for a little, the cost of crypto can skyrocket anytime.
Thank you for reading & have a good day!