Advantages And Disadvantages Of Cryptocurrency

Don’t risk everything and risk your financial future, retirement dreams and the well-being of your family. If you can’t afford to lose the money, don’t invest it in something as unstable as crypto. A blockchain is like a really long receipt that continues to grow with every crypto change.

Bitcoin is the best known currency and receives a lot of media attention. There are also several other cryptocurrencies that are less in the spotlight. The most attractive thing about cryptocurrency can be: lack of government supervision and more privacy for consumers (Bunjaku, Gjorgieva-Trajkovska and Miteva-Kacarski, 2017, p. 37). Other advantages include the simplicity of the boot process, the easy portability and the ability to have a seamless process of investing and / or exchanging money. Cryptocurrency offers the opportunity to invest in some groups of people who have never been able to invest before and to diversify investment portfolios (Theron and van Vuure, 2018, p. 1). While the novelty of cryptocurrency was certainly attractive to some, it was also viewed as oppositional by others.

Some people invest less in crypto because they believe this will be a popular currency and more like a bet on the blockchain technology behind it. When reviewing the account statement, you will calculate the transaction fees charged for each transaction you execute. Data miners would receive compensation from the cryptocurrency network so that transaction costs would not be charged or would be burdened very little. If you entrust the third party with the responsibility for the maintenance of your crypto wallet, you must pay for the service. However, the transaction costs calculated by cryptocurrency transactions would be lower than in the conventional financial system. On the other hand, cryptocurrency has become a home for many hackers.

However, one of the advantages of cryptocurrency is that it is likely to be much lower than the transaction costs of traditional financial systems. Exchanges are the platforms that serve as the easiest way to trade different cryptocurrencies, analogous to the app or platform with which you would buy and sell shares. If a hacker can send a policy to the exchange to perform a transaction, he does not have to hack the cryptocurrency. Instead, their fraudulent order is read as a legitimate transaction and accepted by the rest of the blockchain. Over the course of a month, the price of a virtual currency can change by more than 20%.

A portfolio that is 10% invested in Bitcoin and 90% in S & P 500 would have achieved a combined annual return of 26.8%. In addition, the ratio of the composite annual return to annual volatility – a simplified information rate – increases from 0.95 for the S & P 500 to only 1.5 for the portfolio, in which 10% was invested in Bitcoin. A 2020 article on Coindesk.com claimed that Coinbase saw $ 135 billion in cryptocurrency sellers in 2019, an increase of 600% over 2018. The same article quotes a Chainalysis report claiming that payment processors did around $ 4 billion in bitcoin deals in 2019.

You may be wondering what to think of cryptocurrency and whether it has a place in your portfolio. However, if you are not familiar with digital currencies or blockchain technology, even the basic concept can be overwhelming. Since cryptocurrency is decentralized and is not regulated by any government or agency, everyone can access it regardless of their location. This has made payments or investments in cryptocurrency a simple and straightforward process, even for people in remote regions. Some groups and individuals are skeptical of the whole idea in that they call cryptocurrency a “bladder” that will eventually burst.

Everyone can participate in and participate in the blockchain, but data on individual transactions – and the people involved – is backed up using cryptography . For every transaction added to the bitcoin loan blockchain, there is a digital validation process to check and prevent fraud. Crypt currencies are completely digital, so the crypto you own is not assigned a physical currency or an account.