Cryptocurrency is fast maturing, and an array of well-known companies and well-reputed investment funds are gaining direct exposure to the sector. But no discussion of crypto comes without a sizable risk warning attached.
What is cryptocurrency?
Cryptocurrency can be thought of as a kind of digital file that works as money or currency. It is not controlled by anyone – not by an individual or any government – as it is decentralised.
Cryptocurrencies use a blockchain, an online ledger with a highly secured system, to keep transactions more confidential and secure from hackers. They can be used to pay for some goods or services, and can be invested in, or traded for fiat money. The two most popular cryptocurrencies are Bitcoin, the world’s largest cryptocurrency, and decentralised blockchain platform Ethereum.
We have listed the possible advantages you can enjoy if you plan to hold on to some crypto assets for your business. However, before deciding whether to pursue this investment, you should know that while serious money can be made with crypto assets, the losses can be just as dramatic.
- HASSLE-FREE TRANSACTIONS … BUT AT WHAT COST?
You will be using the power of modern digital technology to complete your transactions. You don’t need to fill as many forms or store numerous documents to ensure that your investments are safe. Cryptocurrency itself is powered by a highly secure system that is not easy to hack. However, hackers have targeted cryptocurrency exchanges, meaning many investors store their currency in digital wallets, or even in hardware offline.
- CONFIDENTIAL TRANSACTIONS
With the blockchain system used by cryptocurrency, it’s harder for third-parties to track your financial movements, giving you the confidentiality that you need. This does lead some to question whether this marketplace is a blessing for criminal organisations.
- EFFORTLESS INTERNATIONAL TRADING
As cryptocurrencies are not governed by anybody, they can be thought of as truly global. International trading can therefore be conducted effortlessly.
- LONG TERM VALUE
Because the supply of cryptocurrencies like Bitcoin are fixed (it’s capped at just under 21 million coins), investors expect it to gain value over the long term. Fiat currencies like pound sterling, however, don’t work like that; indeed, through policies like quantitative easing, money can be created by central banks to keep inflation low.
Like anything, it helps if you’re an early adopter. If a cryptocurrency achieves its goals, and attains widespread adoption, investors can be well remunerated over the long term.