Cryptocurrency

CRYPTOCURRENCY

In the news paper and specially financial papers, you keep on reading the term cryptocurrency. Most of the people are not aware about this currency. You keep on hearing such and such person made so much money by trading in cryptocurrency.

The most popular cryptocurrency, bitcoin, has had volatile price moves this year, reaching nearly $65,000 in April before losing nearly half its value in May. By mid-October, the price had risen rapidly again: it hit an all-time high above $66,000 before falling back.

Given below are few things which one should know

1 What is Cryptocurrency?

Cryptocurrency is a form of payment that can be exchanged online for goods and services. Many companies have issued their own currencies, often called tokens, and these can be traded specifically for the good or service that the company provides. Think of them as you would arcade tokens or casino chips. You’ll need to exchange real currency for the cryptocurrency to access the good or service.

Cryptocurrencies work using a technology called blockchain. Blockchain is a decentralized technology spread across many computers that manages and records transactions. Part of the appeal of this technology is its security.

 

2 How many Crptocurrency are there?

More than 14,500 different cryptocurrencies are traded publicly, according to  a market research website. And cryptocurrencies continue to increase. The total value of all cryptocurrencies on 19^th November 2021, was more than $2.5 trillion, having fallen off an all-time high above $2.9 trillion days earlier. The total value of all bitcoins, the most popular digital currency, was pegged at about $1.1 trillion.

3 Why are Cryptocurrencies so popular?

Supporters see cryptocurrencies such as bitcoin as the currency of the future and are racing to buy them now, presumably before they become more valuable

Some supporters like the fact that cryptocurrency removes central banks from managing the money supply, since over time these banks tend to reduce the value of money via inflation.

Other supporters like the technology behind cryptocurrencies, the blockchain, because it’s a decentralized processing and recording system and can be more secure than traditional payment systems

Some speculators like cryptocurrencies because they’re going up in value and have no interest in the currencies’ long-term acceptance as a way to move money.

 

4 Are Cryptocurrencies a good investment?

Cryptocurrencies may go up in value, but many investors see them as mere speculations, not real investments. The reason? Just like real currencies, cryptocurrencies generate no cash flow, so for you to profit, someone has to pay more for the currency than you did.

That’s what’s called “the greater fool” theory of investment. Contrast that to a well-managed business, which increases its value over time by growing the profitability and cash flow of the operation.

Some famous voices in the investment community have advised to steer clear of them.

For those who see cryptocurrencies such as bitcoin as the currency of the future, it should be noted that a currency needs stability so that merchants and consumers can determine what a fair price is for goods. Bitcoin and other cryptocurrencies have been anything but stable through much of their history. This price volatility creates a conundrum. If bitcoins might be worth a lot more in the future, people are less likely to spend and circulate them today, making them less viable as a currency. Why spend a bitcoin when it could be worth three times the value next year?

 

5 Are Cryptocurrencies legal?

There’s no question that they’re legal in the United States, though China has essentially banned their use, and ultimately whether they’re legal depends on each individual country. Also be sure to consider how to protect yourself from fraudsters who see cryptocurrencies as an opportunity to  investors. As always, buyer beware.

 

6 Cryptocurrency and India

Indian govt is bringing a bill in next session of Parliament. This will frame rules for cryptocurrencies aimed at prohibiting private coin while providing a framework for the creation of an official digital currency to be issued by Reserve Bank of India. The bill will also seek to prohibit all private cryptocurrencies in India. However it allows for certain exception to promote underlying technology of cryptocurency and its uses.

In the end, for those who see cryptocurrencies such as bitcoin as the currency of future, it should be noted that a currency stability. As per some financial experts, cryptocurrency is an incredibly speculative and volatile buy. Stock trading of established companies is generally risky than investing in cryptocurrencies such as bitcoin.

We will all know in future, what will be the future of cryptocurrencies globally.

Waiting,for your feedback on this blog.

Anil Malik

24^th November 2021