Cryptocurrencies and blockchain technologies are gaining momentum. Their application is expanding, and real-world companies more and more often aim to join this field. What is cryptocurrency, and what are its pros and cons? Let’s discuss it in this article.
Cryptocurrency is digital funds that function online and are secured by cryptography. Many crypto assets are built on the basis of decentralization, which provides entire transparency and the impossibility of faking, deleting or undoing transactions in them.
Digital assets do not depend on governmental decisions on their emission, price and purpose. This information is encrypted in their algorithm at the development stage and cannot be changed by any centralized authority. So neither central banks nor the government can manipulate crypto, for example, as they can do with traditional finances, increasing emissions.
Because of the lack of a central body to control as well as the youth of the crypto industry, digital assets are subject to increased volatility. There are assets backed by traditional finances, called “stablecoins”, whose price is always around one dollar or euro, but most cryptos have nothing to do with traditional money.
There are some factors impacting crypto rates:
- the market trend;
- investors’ sentiment;
- demand and supply;
- competition;
- news background.
Under the pressure of these factors, the crypto market moves up and down, creating earning opportunities for traders and investors.
Is Crypto a Good Investment?
Many examples proved crypto to be an excellent investment option because people raise millions from them. However, there are numerous cases when people lose their capital. Thus, increased volatility has two sides of the coin. Let’s see the advantages of crypto:
- There are no intermediaries in crypto transactions, so they are much faster and cheaper.
- They are not connected and do not spleen on banks.
- Possibility to make a fortune by having a small initial investment.
Disadvantages:
- Crypto high volatility beard increased risks.
- Illegal schemes can be accomplished through blockchain.
- Hacker attacks.
To avoid “surprises” when working with crypto, invest in crypto coins using reliable crypto platforms, protected from hacker attacks and offering profitable trading tools. Also, trade with small sums and diversify your portfolio. Learn trading strategies and tools on the WhiteBIT Blog.
