At BMG Money, we know that our allotment loan clients are always trying to make the most educated financial decision. That’s why we’ve created our finance blog, to always stay on top of trends in the world of lending and money. One of the hottest topics right now is cryptocurrency. What is it? Where can we get it? Should we be investing in it?
Cryptocurrency is a digital currency that is exchanged to complete transactions. Similar to Apple Pay or Paypal, you exchange Cryptocurrency without ever having it in your physical wallet. Specific conditions must be met before cryptocurrency can be exchanged, including verifying any funds transferred and regulating the number of units generated. Cryptocurrency is independent and does not require a central bank. Decentralized cryptocurrency can provide personal wealth; but cannot be confiscated or restricted.
Bitcoin was created in 2009 as a new currency by an individual using the name Satoshi Nakamoto as an alias. The transactions do not require a bank or a middleman. Bitcoin has numerous uses including purchasing games for an Xbox, buying furniture through Overstock, or using Expedia to book a hotel room. It can additionally be used to make international payments, and since it is not connected to any regulations or country, payments are cheap and easy. Numerous businesses accept this type of currency because it can be spent in the same way as a dollar bill, and does not have credit card fees. It is often used as an investment in the hopes the value will increase.
Some of the Most Popular Cryptocurrencies
Litecoin is one of the older cryptocurrencies, and has gained attention as a major part of blockchain technology. Ethereum is much newer, but is the second most popular cryptocurrency anywhere in the world. Ethereum originally launched in 2015, and not only functions as a cryptocurrency, it is also capable of being used for crowdsourcing and smart contracts. The only purpose of Litecoin is as a digital cryptocurrency, although it can be mined.
The Acceptance of Cryptocurrency
It used to be difficult to locate merchants accepting cryptocurrency, but this has changed over time. Numerous merchants both offline and online now accept cryptocurrency as a form of payment including prominent retailers, restaurants, bars and small local establishments. Cryptocurrency can even be used to pay for airline flights, hotels, college degrees and jewelry. There are ten different currencies accepted by Apple in the App Store. Some of the newer specialty businesses accept only cryptocurrency.
Investing in Cryptocurrency
A lot of people feel cryptocurrency is an extremely hot investment, and the stories of individuals becoming millionaires due to cryptocurrency are abundant. The value of cryptocurrency can increase dramatically overnight, but it can also crash. For this reason, cryptocurrency must be considered a high-risk investment. There are no other assets with fluctuations in market value anything like cryptocurrency. It is also partially unregulated which means the possibility of certain jurisdictions outlawing cryptocurrency is real. The exchange can be hacked, and the options must be carefully considered.
Purchasing cryptocurrency can be easy to acquire due to the number of exchanges, or difficult depending on the cryptocurrency desired. The process has become easier due to major exchanges including BitStamp, BitFinex and Kraken because they sell many different types of cryptocurrency. This can be accomplished by using a specific ATM or by meeting with the seller in person. Once cryptocurrency has been purchased, a way to store it becomes necessary. Wallet services are offered by the major exchanges for this purpose. Although this is convenient, it is safer to store currency on a hard drive in an offline wallet. This secures the purchase and provides full control to the buyer.
The Market Value of Cryptocurrency
It is important to keep track of the market value of cryptocurrency and all related news. Although it depends on the part of the country the purchaser resides in, once losses or profits have been made in the cryptocurrency market, it may be required to provide this information in tax reports. The regulations vary greatly between countries, and it is important to be aware of the regulations in the purchaser’s area. Please speak to your Financial Advisor when making any speculative decisions in regards to your investments.