Cryptocurrencies are still on everyone’s lips in this brand new 2022. As a result, many investors are looking for new investment alternatives. One of the most interesting is, precisely, investing in cryptocurrencies: assets that have experienced a significant revaluation since their creation and that, according to the experts, will continue to have an upward trend.
Crypto investment was fueled by rising institutional adoption in 2021, with bitcoin hitting a new all-time high of nearly $61,000 as companies like MicroStrategy, Tesla, and Block have added the digital currency to their balance sheets and people keep asking for FAQ about Bitcoin.
Main 2 Characteristics of these digital currencies
The first is that there are no bills or coins like euros, dollars, or pounds. Cryptocurrencies are virtual and, although they can be stored on physical devices (the so-called wallets or material purses such as hard drives or USB sticks), they do not have a physical representation as such.
The second is that cryptography is used to create new units. P2P technology is the one that, for practical purposes, makes it not depend on any government or country: there is nobody or central government in charge of creating new currencies and putting more money in the market.
How do Cryptocurrencies work?
Currently, cryptocurrencies are not considered a means of payment, so they are not covered by customer protection mechanisms like the Deposit Guarantee Fund or the Investor Guarantee Fund.
What stands out most about the operation of cryptocurrencies is that when you make any transaction, you cannot modify or cancel it.
As they are totally digital assets, you must acquire a virtual purse or wallet.
The main difference between cryptocurrency’s operation and that of traditional currencies is that, while the latter see their value modified according to the interests of the banks, each cryptocurrency has its own algorithm to exchange traditional currencies (such as the dollar or the euro) for cryptocurrencies, there are exchanges, which are companies dedicated exclusively to it.
What is cryptocurrency investment?
There are many cryptocurrencies available, all with their own features and applications.
Those with the largest market capitalization are, at least for now, a minority that includes bitcoin, bitcoin cash, ether, litecoin, and dash.
Although its validity as a payment method is fundamental to its value, cryptocurrencies are usually more similar to commodities such as gold than to the Forex market.
The issuance of cryptocurrencies is not regulated; therefore, the investment is at the investor’s entire risk, as there is no regulatory entity that verifies said assets.
Therefore, when investing, we must be cautious since the cryptocurrency market is so vast that today we can find many investment options, some being very safe and others becoming online scams.
Today many virtual wallets can be downloaded to the phone as apps. In these applications, the user must enter their personal data and debit or credit card.
Then, you will be able to exchange real money for the cryptocurrency of your choice. Likewise, from these apps, the user will cash out when he deems it necessary. However, it is recommended to be careful in the application since some have had liquidity problems. Therefore, it is recommended to use the most significant number of users.
Is it the best investment option in cryptocurrencies long term?
Currently, investing in cryptocurrencies in the long term is very simple and profitable, but you must know the market before investing.
In the long term, some of these assets have appreciated dramatically and have a market capitalization of billions of dollars.
In this type of investment, the price of cryptocurrencies is expected to rise over time. Typically, a long-term investment should be held for a minimum of 6 months to 1 year.
Long-term crypto investors plan to hold their investments for several years in some cases.
Cryptocurrencies, blockchain, and tokens are disruptive technologies that will change many industries in the coming years. For this reason, it is recommended that if we are interested in the subject, we go now to invest study or investigate it, since it is now when it is starting, and everything remains to be done.
At the same time, technologies will soon mature along with the popular culture of financial purchases and processes. There will be no going back in this system. Even those who do not know about the subject are starting to work with cryptos. It is a competitive advantage in the digital era of e-Commerce necessary to exchange goods and services.