More and more people are becoming interested in Bitcoin and other cryptocurrencies like Ethereum, Litecoin, Bitcoin Cash, DogeCoin, and many others. In 2017, the University of Cambridge gave an estimate that there are around 5.8 million unique cryptocurrency wallet users and that the majority of them are Bitcoin users.
It is likely that this year, more cryptocurrency wallets will be made and more people will give their attention to Bitcoin specifically as its prices have once again skyrocketed. Currently, the value of a Bitcoin is already playing around 18,000 US dollars and it is easy to understand why it’s getting a lot of attention from investors again. However, investors need to do their research and know the following things before considering owning any cryptocurrency.
- Crypto is extremely volatile
Volatility is the degree of variation of a specific trading price in the long run and cryptocurrencies can be extremely volatile. This is because the trading of cryptos happens virtually on various cryptocurrency exchanges rather than a central exchange.
IN the past six months alone, Bitcoin has undergone four corrections of at least 20 percent. The value of cryptocurrencies can be unstable as it lies in the perception of others, in the hype, and the value of investments. It’s simply tough to gamble with.
- Cryptocurrencies are virtual, intangible assets that need strong cybersecurity
Bitcoin and other cryptocurrencies are stored online and this makes users susceptible to hackers. While cryptocurrencies use blockchain technology that makes your transactions safe, you still need to make sure that you are protecting your digital assets by using a secure wallet, having a strong password and private keys, and most importantly using encrypted networks like a VPN when logging in to your crypto wallet.
Using a VPN can help encrypt your network and transactions. This will make it extremely hard for cybercriminals to access any of the information that they can relate to your cryptocurrency wallets.
- Cryptocurrencies are operated with the use of blockchain technology
Blockchain tech is a system used to record information in a way that is impossible to manipulate or change. It is essentially a digital ledger of transactions that are duplicated and distributed through an entire network of computer systems. Through this technology, it is easy to trace cryptocurrency transactions.
What’s great about it is that it makes the operations of cryptocurrencies decentralized. This means that nobody else is involved in processing transactions and this is why it is secure and transparent. Through this, crypto transactions are also usually quicker than bank ones.
- Many big companies are interested in cryptocurrencies
Ever since the value of Bitcoin peaked in 2017, many companies suddenly expressed their interest in not just Bitcoin but also cryptocurrencies in general. Some companies only go as far as making transactions with cryptocurrencies but others are interested in creating cryptos of their own like Facebook.
Facebook has created but is still developing its digital currency that is also blockchain-based called Libra. Initially, it was announced that Libra will be available to the public in the first half of 2020, but there is no update as to when it will be available as Facebook is working on addressing concerns about the development of this cryptocurrency.
- Know the difference between hot and cold wallets
Before creating a wallet for your cryptocurrency, know there are two ways that you could go about this. You can choose from a hot and cold wallet. A hot wallet or storage means that you will be storing your crypto in a place that is connected to the internet. This is more common as it’s easy as setting up a Facebook account. You can access a hot wallet through your phone and other mobile devices.
Meanwhile, a cold wallet or storage is a place where you can store your cryptocurrency without the need for the internet. Many consider this as a safer option because it is less susceptible to hackers as your wallet or account isn’t online. However, unlike hot wallets, cold wallets may cost you money. You might have to pay as much as 80 US dollars to get a cold wallet.
With the current value of Bitcoin, it’s simply hard to ignore the potential that cryptocurrencies have. As an investor, however, you should always know what you are getting into before taking any steps. These are just a few important things that you should know before investing in any cryptocurrencies. It’s always best to do more research and take advantage of the information that the internet has to share about this since it concerns money.