What is Cryptocurrency: Understanding the Basics

How does cryptocurrency work?

Cryptocurrency is a term that is commonly heard especially among those who are also familiar with online investment. They are a type of unregulated digital currency that is only available in electronic form and let you buy goods and services or trade them for profit. There are many popular ones such as Bitcoin, Ethereum, and Tron. This alternative form of virtual currency makes international commerce easier as the currency has its own value which is easily converted to local currency by means of a crypto wallet. This article will briefly explain what cryptocurrency is, and if it is safe to invest in cryptocurrency.  

What are they worth?

Like any other currency in the world, cryptocurrency value is determined by the scale of user demand, its scarcity, and the ease of utility. Though it is virtual currency, it can be used like real money. With more organisations getting involved with blockchain and digital currency, the usage of cryptocurrency is predicted to be the future of all currencies.

Why are they popular?

As with many things, cryptocurrency also has pros and cons. One of the biggest reasons why cryptocurrency is popular is due to the low amount of fees associated with it. It is also not associated with world governments. With the increasing usage of cryptocurrency, there is a potential for profit when the price rises. The usage of cryptocurrency also affords the user a greater measure of online security, thanks to encrypted online wallets that render the usage of credit cards unnecessary. However, as it is still a fairly new concept, the volatility of the price is a concern. With the normalisation of the usage, however, this issue can be addressed.  

Is it a good investment?

With more industries showing an interest in cryptocurrencies, and more merchants are accepting it as a form of payment, there is high potential for cryptocurrency to excel in the digital era. Investing in it while the price is low would be considered a good move, seeing the trajectory it is taking. For beginners in cryptocurrency, it can be a way of diversifying your investment portfolio.

Understanding the infamous crypto scam

Besides the pandemic, the year 2020 saw a wave of ransomware attacks sweep across many industries. Ransomware attacks are when a victim’s computer systems are accessed by the hackers, and sensitive information are either rendered inaccessible by the victim, or the hackers threaten to expose sensitive data unless a ransom is paid. Many industries that were forced to work remotely had no choice but to pay up in order to keep operating. Most of these ransoms were paid in Bitcoin due to the anonymity it gives the hackers, as well as the speed of transferring the ransom and the easy accessibility on both sides. However, with the increasing usage of cryptocurrency, cybersecurity providers are constantly boosting and updating their services.

How do I protect myself? 

It is important to investigate the company that offers the cryptocurrency before investing in it. A provider that has a good standing and is well known is usually reliable. Find out who the major investors are, and if you would have a stake in the company, or just own the currency you have bought. Another good measure is to see how far along the currency is; whether the company is looking for investors to develop the currency, or if it is already developed. The farther along it is, the better.

To find out more about cryptocurrency and cyber safety, read our CARE blog articles today!