Cryptocurrency

Anthony Acevedo

The value of the Dollar is dropping as the years go by, new kinds of currencies have arisen in a Digital Form.

Cryptocurrency is an upcoming type of virtual currency and a way of payment in some locations. But what is it Exactly? It’s a digital currency that was founded in 2009 by a man who goes by the name Satoshi Nakamoto, the founder of Bitcoin. Cryptocurrency is decentralized and uses blockchain technology, which according to Investopedia it’s, “. . . a distributed ledger enforced by a disparate network of computers”. Blockchain in the simplest terms is a kind of database that stores transactions while also having security. There’s more than 4,000 types of cryptocurrencies as of early 2021, but many of them aren’t supported or have low trading value. It’s also mainly used to invest and make profit rather than exchanging them for goods and services.  However, there are some cons to Cryptocurrency. 

The disadvantages of Cryptocurrency are its regulation, exchanging it for goods and services, and large losses. One big disadvantage to crypto is trying to understand what it is and how it works, which can taint its credibility. People who can’t comprehend or understand crypto tend to believe it’s a scam and that it’s all fake. Similar to buying and selling stocks, buy low and sell high, the timing can be unfortunate and prices can drop immensely, causing huge losses. There’s also the issue of exchanging crypto for goods and services. There are little establishments that accept crypto as a form of payment. It’s also unregulated and decentralized, which allows people to buy nefarious objects or do illegal transactions. In a study in 2019, “. . . 25% of bitcoin users are involved in illegal activity and that 46% of bitcoin transactions are associated with illegal activity” (Thul). Crypto can be exploited by criminals and be used for illegal activity. But, there’s also benefits to cryptocurrency.

 There’s advantages about cryptocurrency such as transactions, no rates, and good security. Another Advantage that crypto has is that it’s decentralized. With crypto being decentralized, it means that, “ No government or bank controls how they’re produced, what their value is, or how they’re exchanged” (Hogan). This makes the currency more trustworthy due to how stable they are and how long they’ll survive in the long run, compared to the dollar which is going down in value. Transactions made with cryptocurrency don’t require a fee compared to the many fees that a bank charges you with. If there was a transaction fee, it would be through external services such as third party applications that help manage your crypto wallet. Exchange rates, interest rates, transaction charges, or other rates don’t affect cryptocurrency and you’re the sole owner of your crypto, with the exception of Third Party Management. With pros and cons listed, investing in cryptocurrency is the hard part.

Investing your hard earned money into cryptocurrency can be difficult due to the timing of when to buy and to sell. Keep in mind that investing in crypto isn’t the best way to get rich fast, but rather another source of income. Another major point to remember is to never invest your entire savings into crypto due to how unexpected the prices can drop. When investing in Crypto, be mentally aware about the sudden price drops and increase and act rationally rather than emotionally. Avoiding bad trade strategies is another tip to know, such as listening to Crypto “gurus”, and listening to people hyping up a cryptocurrency and promising that it’ll bring great profits. Another tip is to make sure that you have a good source of income and about more than $500 in emergency funds. Diverse your investment instead of sticking with 1 crypto because it’ll help your portfolio look good and won’t be that bad when prices drop drastically. Also, do research on the crypto you want to invest in and look for the patterns on when to buy and sell. Keep note that investing in crypto is the way to get rich or become a millionaire, but rather putting money into retirement is the easiest way to gain wealth. Here are a couple of Cryptocurrencies that are available to buy, trade, and sell with their purpose and function.

Bitcoin is one of the most common known cryptocurrencies and one of the most expensive with it being worth more than $55,000 and is steadily rising. According to Bitcoin’s official website it’s an, “. . . open-source; its design is public, nobody owns or controls Bitcoin and everyone can take part.” It is decentralized which allows it to be managed by  the network rather than central authority or banks. Some places are slowly allowing Bitcoin as a form of payment such as Whole Foods, Nordstrom, and Tesla. Though there is a limit to how many Bitcoin is available, which is 21 million BTC. There’s another method to get Bitcoin, but it is rather difficult. Mining for bitcoin may sound odd or weird but it is possible, but it takes about 72 terawatts which is more than what a Nuclear power plant and the power that Lightning creates combined. There’s another well known crypto that some talk about, it’s Ethereum. 

Ethereum is another common known cryptocurrency with it currently being worth more than $1,800 at the time of writing this. It’s on a different blockchain called Ether, and is used to pay off transaction fees. Developers can use the Ethereum block to create new crypto assets called Ethereum tokens on decentralised apps, or dApps. Wrapped Bitcoin is an example since it represents Bitcoin on an Ethereum blockchain (Coinbase). In about 2-3 years, Ethereum will be upgrading to Ethereum 2.0 (ETH2), which aims to be faster and less expensive than its previous version. Those who have invested in Ethereum can stake their coins into ETH2 and receive rewards such as a 7.5% APR. Another common, possibly more affordable, crypto is Litecoin. 

Litecoin is another atlcoin, a crypto that’s different from Bitcoin, that costs way less than Bitcoin and Ethereum with it being worth more than $180 as of writing this. The aim for Litecoin is to be faster payment confirmation time and near zero transaction fees compared to Bitcoin. According to the Litecoin official website it says that, “. . . [Litecoin] is a fully decentralized without any central authorities.” This enables users the power to control their money and is an open source software. It also makes sure that the user inputs their password before trading or spending with Litecoin. But this is just one of many altcoins available to trade, sell, and buy. 

There are many more altcoins that have their own unique or similar features to the previously mentioned coins. Dogecoin is a well known one with it being worth $0.05 at the moment, and is a cheap investment but with little returns. SKALE is another penny coin, with its current value of $0.74. An odd altcoin is Bean Cash with a current value of $0.000593, which is one of the cheapest coins available. There are also a good handful of altcoins that are worth around $1.00-$1.30, with Ren, Cardano, Ox, and Algorand. There’s so many options to choose from, so picking and investing wisely for it can bring huge returns in the long run.