Unless you’ve been living under a rock, you’ve probably heard of cryptocurrency before. Whether you learned about it from an obnoxious coworker or a friend who likes modern investments, the use of cryptocurrency is spreading and it’s becoming more popular.
Essentially, crypto is a digital currency. It’s part of a decentralized network, where no one entity is in control. This makes it easy to complete transactions between users without going through a third party like a bank. That’s one of crypto’s main appeals, along with the fact that it’s a secure form of online payment with little chance of being hacked.
If you’re curious to learn more about cryptocurrency, here are a few things to know.
1. Crypto has a history of volatility – but that could change.
While all investments carry risks and the stock market isn’t always stable, crypto is perhaps one of the most volatile investments you can make. Prices rise and fall quickly and dramatically. This is partly due to the fact that it’s a relatively new market and it remains to be seen how it will be regulated and used in the future. However, since cryptocurrency has a lot of potential uses and possibilities for growth, many consider investing in crypto to be worth the risk.
Since volatility makes people wary of using cryptocurrencies for day-to-day purchases, some people prefer to use a cryptocurrency that remains stable in value. Stablecoins are attached to assets that aren’t as volatile, such as precious metals or another currency. It’s backed by real money instead of existing solely as a digital token, helping its prices to remain stable. Brale allows financial institutions to create their own stablecoin backed by assets they already have. It gives these institutions control over how many coins are in circulation.
The future of cryptocurrencies and stablecoins is still uncertain. Whether or not these become mainstream forms of payment depends on government regulations and other factors.
2. Mining cryptocurrency has become less accessible.
In its early days, Bitcoin could be mined with a personal computer. Some people who were ahead of the curve made significant amounts of money mining crypto without much of an investment. However, these days, crypto mining has become a lot more competitive and it’s virtually impossible to get rich from it without investing a lot of cash in a complex mining rig. Most crypto miners use machines called ASICs with a lot of computing power to mine Bitcoin.
There are still some cryptocurrencies that you can mine from home, but don’t think you’re going to make a lot of money from mining unless you’re willing to invest in expensive machines or join a mining pool.
3. Bitcoin isn’t the only cryptocurrency that exists
Many people use cryptocurrency and Bitcoin synonymously since it’s one of the most popular cryptocurrencies. However, there are actually thousands of different cryptocurrencies available. Each one is a bit different and has its own unique advantages.
Ethereum, for example, is the second largest cryptocurrency. One of the advantages of Ethereum over Bitcoin is that it ha started using a proof-of-stake system for mining. This system has significantly reduced their energy consumption and is much more environmentally friendly. USD Coin is a stablecoin that is backed by the US dollar. It cannot be mined and maintains its value, unlike other traditional cryptocurrencies. Before buying cryptocurrency, look into the different options available.
4. Cryptocurrency has a lot of potential.
The reason why many investors continue to be enthusiastic about crypto despite its volatility and the uncertainty of how it could be regulated in the future is because of its great potential. The technology that makes cryptocurrency possible, called blockchain, could become the future of the Internet. Blockchain technology allows users to interact and make transactions securely without using third-party apps. Its potential is limitless, from creating virtual workspaces to paying online without a bank or credit card. This blockchain-based internet has become known as Web3. While many people are already working with blockchain technology, Web3 is still just a concept of how the internet might work in the near future.
What does that mean for cryptocurrency? If people are spending more time interacting in virtual spaces online, it’s only natural that they would want to use a currency that facilitates transactions in these virtual worlds. Since Web3 would be based on blockchain tech, it’s only natural that cryptocurrencies, which also use blockchain, would be the currency of choice. There’s no need to open a bank account or wait for credit card transactions to be processed. People can easily exchange crypto directly. It can also be used to buy digital assets, such as NFTs or virtual property. It’s still unknown how the future of the internet will develop, but many are placing their bets on Web3.
If you’re not familiar with the basics of cryptocurrency, it’s worth doing some research and understanding this unique currency. While its future is up for debate, many believe it will become more important in the years to come. So take the time to learn about crypto and Web3. The future will be here before we know it.