Are cryptocurrencies a store of value or investments?
#Are cryptocurrencies a store of value or investments?
There is a lot of talk about cryptocurrencies, the role they are playing in investments and how we can profit from them. For many, the situation is one of hope, while, for others, skepticism is the most notable tonic. Let's clear your doubts about the crypto world and whether these securities are treated as a store of value or as an investment.
What are cryptocurrencies?
If you are here, it is because you already know something about cryptocurrencies. They are nothing more than virtual currencies that have no physical format, and operate under the blockchain network. The name crypto is given because they operate under cryptographic encryption. No one can make copies of cryptocurrencies.
Cryptocurrencies are not backed by any governmental or economic institution, so far it has only been Costa Rica who has taken the most obvious steps for the Bitcoin**, incorporating it into its official monetary system.
Cryptocurrencies, not having a physical format, are stored in the large database that is blockchain and customers can save them in the so-called wallets or digital wallets. Although blockchain would deserve a separate article, we can say that it is the basis on which these currencies operate, with all transactions being recorded univocally and inviolably.
When we carry out a cryptocurrency transaction, all the parties involved in it must validate it. Moreover, it cannot be undone. The main advantage of cryptocurrencies is that they may be called to revolutionize the financial world, and that, since they are not subject to the control of any type of institution, they are a totally universal medium. However, this can also be their Achilles' heel. As they have no official backing, they are not subject to the Deposit Guarantee Fund or the Investor Guarantee Fund.
What are the 3 most popular cryptocurrencies?
To talk about cryptocurrencies is to talk, first of all, about Bitcoin. This was the cryptocurrency that started it all. It was born in 2008, the result of the work of Satoshi Nakamoto. Today, it is unknown whether this name corresponds to a real person or to a group of no more than 10 individuals who launched this project. Bitcoin is the currency of reference, in fact, it could be said that it is the one to which the rest look to. It is minted in one figure, in a virtual way, 21 million units of bitcoin, that is its top figure.
But in addition to this cryptocurrency there are a huge number of them, it is currently estimated that there are more than 10,000 operating throughout the blockchain network.
And besides Bitcoin, these two are perhaps the most popular cryptocurrencies, we are talking about Ethereum and Binance Coin. Although it is unfair not to mention, even in passing Dodgecoin or Cardano.
Ethereum is not a cryptocurrency itself, but the platform on which Ether, which is the actual name, operates. Launched in 2015, transactions are executed in open source, but unlike Bitcoin, and are done in a much faster manner. Therefore, those who are solving the algorithms, the popular miners, have the ability to receive more amount of rewards. The number of Ethers is 18 million units.
Binace Coin is the crypto of the popular Binance platform. It was launched in 2017, operating under the Ethereum blockchain, but already does so from its own. Moreover, its platform is one of the fastest and has the added ability to validate smart contracts, called to revolutionize the labor, legal and tax world. The "smarts contracts" will be as much of a game changer as cryptos. The Binance Coin cap is 100 million units.
What is an investment fund
To talk about investment funds is to talk about an attractive product when it comes to obtaining a certain return. Its main advantage is that it does not require a very high capital to start investing. It is still a savings instrument in which many people contribute capital that is traded in different ways, whether shares or fixed-income securities.
An investment fund has the advantage of giving access to a large number of markets that, individually, would be practically unattainable.
Those who invest their savings in an investment fund, do so trusting that the fund manager will analyze the market and find the best opportunities to make the assets profitable.
Obviously, there are cryptocurrency investment funds. We always remember the importance of "not putting all your eggs in one basket ". Diversifying our investments, also in different virtual currencies, is always a smart move to try to get the best return. Therefore, if you are starting out in the world of cryptocurrencies, nothing better than looking for a good investment fund with which you can play it safe.
Are cryptocurrencies useful?
Are cryptocurrencies suitable for long-term investment?
Investments in cryptocurrencies are always subject to a lot of parameters, like any type of asset. On the other hand, it must always be taken into account that volatility is very high. What at first may be a disadvantage, is what allows to take advantage of it and obtain great returns.
Regarding the possibility or not of investing in cryptocurrencies in the long term, it should be pointed out that not all of them have the same behavior. Studying them and getting to know which ones have the best upward projection will allow you to make a more accurate investment.
One of the main differences with respect to fiat money is that it loses value. Do you remember what you could buy with 10 € in 2003? Cryptocurrencies, being decentralized, are not as affected as any of the 175 world currencies.
Getting a cryptocurrency portfolio and waiting for results can always be a good idea, remembering that this money should not be of extreme necessity and that, although it may seem crude to count it, you are willing to lose it. We never invest money that we lack, but on which we expect a series of returns.
If you are thinking of investing in cryptocurrencies, we recommend joining NAGA, which offers a NAGA account. DEMO account with $10,000 so you can do as much testing as you need, before using real money.
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