The rise in popularity of cryptocurrencies is second to none. It’s making headlines and has become the buzzword in the investment world. While there are so many other investment options, cryptocurrencies still top the chart of the most popular investment vehicle. If you are looking to jump on the crypto bandwagon and explore what the market has to offer, Rafael Oliveira Bitcoin provides insight into what cryptocurrencies are all about including the pros and cons to help you make informed decisions. Rafael Oliveira is a seasoned investor who is also sharing his knowledge on investment in cryptocurrencies so you will understand what it entails before tapping into it.
Named digital money, cryptocurrency works as a medium of exchange that allows people to make payment to each other. While the fiat currency is legislated by the government and carries intrinsic value, Crypto on the other hand is not legislated. In traditional currency, the government is in control of the money – the production and supply of money. But crypto exists as digital tokens that are fixed and cannot be controlled or manipulated by the government. It is a more decentralised and democratic alternative to national currency.
Cryptocurrency in simple terms is an alternative form of payment that is secured by cryptography which makes it nearly impossible to double spend or counterfeit. Because it is digital, it is a peer-to-peer transaction that enables anyone anywhere to send and receive money digitally instead of physical money that is carried around.
Cryptocurrency derived its name because of the encryption algorithms that are used to secure the network such as digital signatures and hashings. Many believed cryptocurrency is the future money that is set to replace the centralised traditional currency. However, there are still people on the fence who believe Crypto is just a fad. But with the rise in popularity and adoption, cryptocurrency is here to stay!
Pros of Cryptocurrencies:
Lack of Control or Manipulation:
Since there are no third parties such as government, banks or financial institutions involved, this eliminates the possibility of control or manipulation. There is transparency and it’s free from the vying eyes of third parties.
Ease of Fund Transfer:
Transaction in Crypto is fast as lighting speed as compared to traditional currency. As there are no throwing parties, there are less hurdles to cross.
Potential for Quick Gain:
The Crypto market has skyrocketed at an all time high and there are a lot of coins to invest in today. As the supply from miners increases, the demand for it increases as well which boosts the value. Hence, an increase in value and return.
Promote Cross-Border Money Transfer:
Cross-border transaction has been made easy, thanks to cryptocurrency. Cryptocurrency can be easily converted to US dollars, Indian Rupee, European Euro and many more. The fiat currency can be easily converted to Crypto, across different wallets or borders, which is then converted to the destination fiat currency. All at minimal transaction fees.
Hedge Against Inflation:
Many believe Crypto can help best inflation as it can’t be penetrated by external influences as compared to fiat currency which can loose value as it is being controlled by the government. Plus, it is not tied by any economy, or business. It is a world class asset that is highly sought-after across the globe.
Safe Online Transaction:
Crypto is supported by a blockchain ledger which can be very had to decode. This offers far better security and privacy than any other form of electronic transactions.
Cons of Cryptocurrencies
Promote Illegal Activities:
Cryptocurrency has become a useful tool in money laundering schemes and are associated with several online crimes such as fraud and drug trafficking. Because transactions are somewhat anonymous, detection of crimes or culprits become difficult.
Not Widely Accepted:
Cryptocurrency is still not accepted by many countries. While some have banned it’s usage, some countries are beginning to regulate. This makes investment in cryptocurrencies more risky.
No Return or Cancellation:
Even seasoned cryptocurrency investors can recall a time when they mistakenly sent funds to the wrong address or sent the wrong amount. Unfortunately, cryptocurrency transactions can be reverted or cancelled, Rafael Oliveira Bitcoin says. You best bet is check and double check transactions before you click send, Rafael advises.
Risk of Coin Loss:
For a strong security, users have a private key to access the digital tokens in their wallets. Loss of the key means of loss of access to the wallet. And loss of access is loss of coin which unfortunately cannot be recovered in any way.
High Cost of Mining:
As much as anyone can mine Crypto as much as there is access to internet connection, yet a lot of energy goes into mining. Infact, energy as large as one a whole country will consume. This means mining is only limited to large firms who can afford the energy consumption. Plus, high energy consumption can lead to a high carbon footprint.
Although cryptocurrency are meant to be decentralised, power still lies in the hands of a few who are their creators. That is why these coins can still be manipulated by the highest holders which can result in price swings.
Should you Invest in Cryptocurrency?
The answer is it depends on your investment goals and risk tolerance. After understanding the advantages and disadvantages, it is still vital to carry out research on the coin you want to Invest in and know how the market works before financial commitment, Rafael Oliveira Bitcoin advises.