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Cryptocurrency is experiencing a spike in popularity after the surge in the price of bitcoin, the most recognizable digital currency in the industry. This price surge has convinced a lot of investors and ordinary people to consider investing in cryptocurrency. Since everything in cryptocurrency is virtual—storage, transactions, and so much more —investors should also consider including this investment into their trust, allowing their beneficiaries to have access to their crypto and estate plans when the time comes.
You may be wondering, is cryptocurrency a good investment to put your money into? Is your money safe with crypto? Read on to find the answers to these questions and more.
What Is Cryptocurrency?
Cryptocurrency is a virtual or digital currency that uses blockchain technology to record its transactions. Blockchain is like a huge database where cryptocurrency transactions are stored. All transactions recorded in the blockchain are permanent, they can’t be altered by anyone, and every piece of information can be seen by the public.
What Is A Digital Wallet?
Understanding the concepts of digital wallets and transactions can help you get a better picture of how cryptocurrency works. Once you invest in cryptocurrency, you’ll need a digital wallet where you can keep this investment. This wallet works like a bank account, which is considered property, making it subject to estate planning. To know more about how estate planning works with digital assets, you can ask several agencies, such as Mile High Estate Planning to discuss the advantages of estate planning for cryptocurrency.
Each of the transactions you make, whether payment purchases, money transfers or withdrawals, are considered data, each data transaction is then stored in individual blocks through blockchain technology. When another transaction is made and the same wallet address is involved, this data will be chained or connected to previous transactions that have been recorded under the same wallet. Through blockchain, people can see all of your transactions and the amount coming into your account. This process makes it possible for cryptocurrency to create decentralized transactions. No third-party banks, financial institutions, or government can control your digital account, or make changes to the records stored within.
What Does Cryptocurrency Do?
There are many digital currencies introduced into the market every day, the most popular of which is Bitcoin.
Each cryptocurrency has a founder and developers behind it, and they offer to solve a problem in different industries through the use of blockchain technology. For them to fund their goals, cryptocurrency founders and developers offer their currency to the public, much like how company owners offer a share of stock in their companies. There’s a cryptocurrency created for almost every industry. There is specialized dental industry crypto, cloud storage crypto, etc. Bitcoin, on the other hand, is not specific to one industry and can be used for many different transactions.
Today, many establishments already accept cryptocurrency as a form of payment, with many of them believing crypto is the future of currency.
Is Your Cryptocurrency Investment Safe?
You can keep your cryptocurrency in a digital wallet available online or you can buy a wallet ledger. The latter looks like a flash drive that can be opened using codes exclusive to you.
Digital and physical wallets are encrypted with private keys, making it more secure to store your cryptocurrency on it. Hackers would need to have your wallet address, your private keys, and password before being able to access your wallet, so unless you let others have access to all of these, then your cryptocurrencies are safe. Remember, however, that if you forget your private key, you will lose access to your wallet, ensure you have a plan to retain access.
Is Investing In Cryptocurrency Profitable ?
You might have heard of stories about people becoming rich from crypto. They generally bought a huge number of a cryptocurrency years ago when it didn’t have much value yet, only to be surprised by its price years after.
Since cryptocurrency’s market value is volatile, one could get rich overnight, however, not all cryptocurrency is the same. Some cryptocurrency might increase their value massively after a period of time, but some cryptocurrencies end up with plummeting values, this is especially true for those that weren’t able to prove any utility.
Final Thoughts
Fiat money, stocks, bonds, and all other commodity investments have risks, just like crypto. It can be profitable for some, but it can also be the reason for plummeting portfolio values.
If you’re more of a risk-taker and you can invest and manage losses, then cryptocurrency might be a good option to diversify your investments. Always remember to understand and study how a cryptocurrency works, so you’ll know if it’s an investment worth your time, money, and effort.
Disclaimer
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.