If you’ve been paying attention to social media or even the news you’ve probably heard of this new trend cryptocurrency. Bitcoin, Litecoin, and most recently Dogecoin are probably some of the names you’ve heard. At first glance, the name cryptocurrency sounds like something from Revenge of the Nerds, but once you break it down conceptually, it’s pretty cool.
What are cryptocurrencies?
Cryptocurrencies are a digital form of payment in some ways no different than the USD, the pound, or the yen, except they have no tangible medium. Backed by cryptography or Blockchain technology cryptocurrencies are nearly impossible to duplicate Giving them a unique position.
Bitcoin was the first major cryptocurrency and paved the way for many others. The person responsible for creating Bitcoin goes by a pseudonym called Satoshi Nakamoto. In 2008 he started developing what would become blockchain technology that initially was just something tech guys traded back and forth.
The game changed in 2010 when a Florida man ordered $25 worth of pizza and attempted to pay with Bitcoin. It worked. Bitcoin grew and a decade later is now valued at over $55,000 per share. The interest in cryptocurrencies continues to grow as many others have hit the market. Some have compared buying cryptocurrency to gambling because of its volatile nature. Others have compared them to stocks alluding that it’s best to buy big and let it sit.
Many express worries about its validity, and rightfully so. However, cryptocurrency has some legit people behind it. U.S. Speaker of the House, Nancy Pelosi at one point suggested Economic Impact Payments (stimulus checks) be paid in cryptocurrency. Some companies even accept some cryptocurrencies as payment. Elon Musk, who’s hosting this Saturday’s SNL, has millions of people dogging to the moon with prices of #dogecoin steadily rising. Cryptocurrencies have maintained their economy and it’s probably safe to say they have a valid future. As of right now, it’s a game of figuring out which will take off and buying before they do.
Things To Consider….
New investment opportunities can be exciting but I urged new investors to proceed with caution. The traditional advice is to have your savings in a good position before making big investments. But I recognize that money is being made and folks want in. That’s another cool thing about cryptocurrencies is that investing in them is more accessible than stock markets.
Community is key – we saw what the power of community can do in these spaces earlier this year when a group came together and raised the value of GameStop earlier this year.
Buy early, buy low – Most cryptocurrencies cost cents right now. We don’t know what the future for them holds but if you’re patient and have money to waste, buy and hold early shares.
Chose the right wallet – Cryptos are stored in wallets which are the services you use to buy them. Coinbase, Robinhood, and even CashApp are popular crypto wallets.
It’s not backed by anything – These days neither is the dollar, but crypto is different in that not only is it not backed, but it is not also nor regulated. Therefore, take precautions.
Crypto is volatile – Bitcoin is a best-case scenario example. Cryptocurrencies aren’t the type of investment you should go into with high expectations.
What’s hot right now?
These currencies are hot on the market. This list is from Investopedia. We aren’t suggesting you invest in these, just telling you what’s hot on the market.
- Dogecoin (DOGE)
- Ethereum (ETH)
- Litecoin (LTC)
- Cordano (ADA)
- Polkadot (DOT)
- Bitcoin Cash (BCH)
- Stellar (XLM)
- Binance Coin (BNB)
- Tether (USDT)
- Monero (MXR)
The future of money?
When Satoshi Nakamoto created bitcoin, one of the main ideas behind it was that it was a decentralized currency. Meaning it’s not regulated by one country, entity, or body of power. It was a means of peer-to-peer currency exchange. Its probable cryptocurrencies will become more widely accepted with time. Some regulations will come, but probably not until after a crash (just saying, historically humans have a way of seeing just how crazy things they can get before we regulate).
Many investment accounts require minimums before the account can be active. Cryptocurrencies break that barrier in a lot of ways. People with small cash amounts can purchase cryptocurrency just as easily and an investor with $50k to waste. Most of the formal platforms like Coinbase, Binance, or Robinhood usually require traders to have traditional bank accounts. However, crypto ATM-like machines are popping up in metropolitan areas allowing traders without accounts to cash in.
As of right now, the possibilities for cryptocurrencies continue to grow. More and more people are taking an interest. The economy is experiencing somewhat interesting phenomena with many people looking for alternative methods to wealth creation. If your interest in growing your wealth via cryptocurrency is what brought you to this blog, I applaud you for caring about your finances and getting active. Just remember due diligence before purchase, and have realistic expectations.
Thanks for reading. Madison’s Accounting and Tax Services is a financial service provider that specializes in helping beauty brands control and grows their financial power, while also passionately providing financial knowledge and resources to communities in local Midwest communities. If you enjoyed this blog please subscribe and share.
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