4 Reasons To Invest In Crypto & 4 Reasons Not To
Cryptocurrency is a virtual money acquired by buying from exchange sites or mining. It is pivoted on blockchain technology which is a shared ledger for agreed, replicated, joint and coordinated data. Mining involves using some special software to solve arithmetic puzzles. Once get you it right, you are conferred a certain amount of coins and transactions are confirmed by blockchain technology.
1. Resilient Against Political Instability
Cryptocurrencies are not inclined to any government control. They are indisputable wealth protected and controlled by individual investors. Their contracts are also digitally secured and exist in an environment where state violence and political unrest cannot gain access. Cryptography technology blocks all forms of government controls.
Cryptography has left exclusive economic power in the hands of ordinary people. In 2015, when China's Yuan buckled, Bitcoin prices rose in value. When the economy of Cyprus went down in 2013, bitcoin market rose, and in the imminent face of Brexit when fiat market went flat on its belly, Bitcoins withstood the tremor.
In Zimbabwe bitcoin spiked amid political turmoil and the military takeover in 2017. With a failing economy, residents prefer it and avoid the local currency which is affected by high levels of inflation.
Mining networks determine the value of digital coins and the codes can be verified. Government-controlled currency cannot offer such safety. Cryptocurrency offers disadvantaged population a way to access wealth from anywhere in the globe. A refugee can use his digital coins even if he is displaced from home.
As long as the government does not switch off the internet, there is little it can do to control the digital coins. Cryptocurrencies are sheltered from political turmoil and uncertainty that affect conventional currencies during electioneering periods.
It is a safe haven from the opinionated and economic mayhem that characterizes many of the elections in some countries. When the situation in any country is politically charged and you can’t access a bank you can still transact some business with your bitcoins.
2. Security Aspects Of Digital Money
Bitcoins are secured using protected digital identity and economics. The computers required to solve the puzzles in order to access are very expensive. This combination makes it a secure investment. Fraudsters are usually looking for easy money, not many would be willing to spend a colossal amount to execute an attack and reverse a transaction.
The absence of third parties means there is the low possibility of counterfeit since all coins are encrypted to ensure authenticity. The impenetrable encryption technology makes it difficult to intercept transactions or hack the system. The links of blocks that record uses combined tasks and time stamps making it hard to tamper with the data. Records cannot be added, and manipulation of information is impossible. Data is safeguarded by removing centralized spots that cybercriminals target. Without a central hub, hackers have a difficult time to concentrate an attack.
The identity of your personal data and sensitive information is also secure. With a substitute identity, nobody can recognize your business online. Transactions are also unique every time even with similar parties. You decide the type of information to communicate to the recipient.
Trusted transactions are the main reason the financial industry is exploring blockchain. There are 3 features that make it almost impossible to penetrate and infiltrate the network.
Data is shared across the network and frequently reconciled. There is no central point and hence no point of weakness. Authorization and management are dispersed across the network leaving no weak point to initiate falsified schemes. A joint digital register alleviates fraud by showing the movement of clear transactions made by genuine members of the network.
Altering, deleting, changing data and creating fraudulent files is not possible in the blockchain network. Members are able to see the history of all the transactions and identify an abnormality. For fraudsters to succeed and tamper with the records, they have to collude in order to gain control of the mainstream phase of the system.
Records of transactions cannot be altered or erased. Adding any new block requires all participants to agree through consensus. The new block is added and connected to the old block by cryptography. The original record is still accessible and you can verify ownership and credentials.
(iii) Penetrating The network
Blockchain restricts invalidated members from gaining access to the network. You must be invited and authorized before you can contribute. Identity management and access control are vital in getting permission into the network. Even if you manage to get a cryptographic members card to access, you cannot add to the blockchain without consensus and therefore tamper with the records.
Cryptocurrency just needs the internet as the only medium to trade. With the internet now available worldwide. They are more accessible than the traditional banking system. Anybody with a mobile phone and connection can trade in digital money.
Universal acceptance has opened the inclusive market to every possible willing participant in a level playing ground.
Should You Invest? 4 Reasons It Could Be A Bad Idea
1. Irreversible Transactions
Transactions of cryptocurrencies are not reversible. If you make a mistake during the deal, there is no central point to ask for refunds and you will lose your money. You have to ensure you are very keen on the details of the recipient before you hit the send button.
You need to have computer knowledge and be fully aware and understand the complexities of the transactions before you commit to trading. There is no room for error. You can pray that the recipient will agree to refund but if he doesn't there is no compensation.
You also have to ensure the safety of your wallet (Digital software that stores public and private keys) and the passwords associated with your coins. You can’t forget the passwords or lose the wallet because chances of losing the coins get high.
Volatility measures the discrepancy of prices of financial appliances within a period of time. It allows understanding of risks associated with the instruments. High volatility means more risk and vice versa. Cryptocurrencies are speculative and can crash any time. It’s not an investment for the faint-hearted. It sizzles and disintegrates (even in the course of a day); you have to handle the stress of keeping a constant eye for massive changes.
Transitory digital money is only significant when you exchange with traditional currency like the dollar to buy items. Since their prices are not regulated, when more people join the market prices increase. So far, there is no foundation knowledge to allow analysts and researchers to investigate and study it as an option for investing.
Global bankers are yet to comprehend the occurrence and eventual development of digital money. What are your chances as a potential investor? Financial specialists have described crypto’s as bubbles waiting to explode anytime.
3. Abetting Felonies
Apart from volatility, there other risks associated with investing in cryptocurrency. You also run the possibility of abetting crime by trading with felons and fraudsters posing as trading partners on the other side of the world. The fact that the investors remain anonymous is also a risk in this case. Money obtained through illegal means like drugs and human trafficking could be laundered through this network. You could end up promoting scams. Hackers never stop learning new tricks. It may be just a matter of time before they crack the code.
4. Education And Adoption
There is still very limited adoption of the digital money worldwide. They have only been legalized in a few countries and this makes them unfeasible for daily use. You have to ensure recognition when spending anything valuable.
The cryptocurrency idea is slowly gaining ground globally but there is a long road to travel. They have to get to the level of transferring value, for commerce and other electronic payment services. It may require applications that allow expansion to handle huge money transfers. There also need to have a language simple enough for the masses to understand.
Despite the explosion seen in 2017, acceptance of cryptocurrencies is still at its formative years. There are still many obstacles to overcome before they can replace the dollar in the global market.