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What You Should Understand about Cryptocurrencies

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Given the rise of cryptocurrencies in the past few years, there are not thousands of different ones currently out there. These are sometimes also referred to as crypto assets. Some of the biggest ones include Ripple, Ethereum, Litecoin, and Bitcoin. It is likely that you have heard of at least one of these before, even if you know very little about them.

Bitcoin trading the ins and outs
Photo by André François McKenzie on Unsplash

What exactly are cryptocurrencies?

First off let us break the word down into two bits and see what the first part (‘crypto’) means. What it stands for is ‘secret’ or ‘hidden’ and alludes to the highly secure technology that is used to keep tabs on which individuals own which currency, and that is also used for facilitating payments being sent between owners. The second part of the word (‘currency’) describes what they are intended to be used for – a means of transactions, an online cash if you will.

However, cryptocurrencies are very different from the monies that we carry around with us in our purses and wallets, as they only exist electronically and are exchanged via a peer to peer system of servers. However, because of this, there are no governments or central banks that can get involved should anything ever go wrong with it.

It is this very thing though that attracts many individuals to the use of cryptocurrencies, as they like to think that they have a great amount of control over their own funds. In reality though, trading and keeping hold of cryptocurrencies comes with significant risks involved. Imagine if your funds ever got stolen, there is no central body there to help you try and get them back for you.

What can cryptocurrencies be used to buy?

Many brick and mortar stores in the United States of America do not yet accept cryptocurrencies as a valid form of payment for the goods that they are selling, so do not expect to be using them to pay for your groceries any time soon. One reason for this is due to the fact that paying with cryptocurrencies is more expensive and much slower than doing so with a regular, physical currency such as US Dollars.

However, there are plans currently under way to make using cryptocurrencies easier. If the idea of this has piqued your interest and you want to buy crypto new zealand, then Swyftx is a great company to do that through. Until then though, cryptocurrencies will continue to be regarded as investments by those individuals who expect the value of them to go up considerably.

Like any investment, the value of cryptocurrencies can also go down and has done or some quite considerably. This is because they are much more volatile and unpredictable than regular currency or other investment assets, such as oil or gold. It is for this very reason that their popularity has not become widespread throughout the whole of society. After all, the value of a cryptocurrency has the potential to fall right down to zero, thus rendering them completely worthless.