Tatsiana Ketrar
Over the last 12 months, Bitcoin has gained almost 600%. That’s why more and more people all over the world are starting to think about investing in Bitcoin and other digital currencies, Market Leader reports.
Indeed, cryptocurrencies has been appreciating over the last few months. In mid-August, Bitcoin has exceeded $4000 for the first time in its history. A couple of weeks later, it managed to reach $5000. Even though the world’s first and biggest digital currency has retraced and is trading under $4000, expert say that this is not the limit and the price is yet to grow higher. They say that in the near future, digital currencies may make rival to the conventional global financial system. However, their opponents recommend against investing in cryptocurrencies, calling them a market bubble, which is about to burst. Let’s dive deep into the matter.
Essentially, any cryptocurrency is a digital payment means emitted to circulate within an online network. Cryptocurrencies are all about decentralization. They are also independent from any regulator or other financial and public institutions. That’s why experts often call them a symbol of economic freedom. Another thing to keep in mind is that cryptocurrency-based financial transactions are often made without third parties and fees.
It all started with Bitcoin, which was launched in 2009. Each digital currency unit (coin) is a file containing a chain of unique encrypted blocks of information. Each computer of the network stores a copy of such the file. Each new file contains the previous sequence as well as the newly-added code. To create a new file (a block), computer power is used. The process of emitting Bitcoins is called mining. The miner gets 25 Bitcoins for emitting a new block. The system is called the blockchain.
The blockchain technology is something that’s all other cryptocurrencies are based on. According to Masterforex-V Academy, the amount of cryptocurrencies is around 1000 and still counting.
Is it still not too late to join the cryptocurrency “gold rush”?
Over a century ago, there was a gold rush in the West. Thousands of miners went there to get rich from mining gold. Today, the situation is similar. However, instead of mining physical gold, people mine digital currencies and try to get rich this way.Today the use GPUs instead of pick hammers. The complexity of processing and creating new blocks increases, which makes miners use more and more powerful computers. The so-called mining farms are getting more and more popular with miners. Essentially, these are super-powerful clusters of computers working together to mine more digital coins and do it faster than their rivals.
Some experts say that the minimal starting capital to get started with Bitcoin mining is well over $1000. Yet, you may need around up to 12 months to break even and start making money. The problem is that the more miners join the environment, the more powerful tools all of them need to mine cryptocurrencies. It also concerns the time and recourses needed to mine profitably. That’s why, under such circumstances and tougher competitions, really profitable mining requires hundreds of thousands of dollars invested in big-scale mining farms.
Investing in Bitcoin can still be profitable
If to consider cryptocurrencies as an asset to invest in, you can still make money by investing in them. Investing in Bitcoin or pretty much any other digital currency out there requires an e-wallet. The next thing is to go to an online exchange to buy a cryptocurrency, or you can buy some coins from an individual.
You can use the coins to make online and offline purchases provided that the seller accepts the digital currency. Or you can buy and hold the currency to sell it later when the exchange rate gets higher. However, you should keep in mind that you cannot get rid of your coins instantly these days since transactions may take some time to be processed and completed. As for the profit potential, digital currencies are quite promising assets to invest in. However, savvy investors always take into account both risks and potential profits. Conservative investors are recommended to invest in digital currencies no more than 20% of their capital. The bottom line is, digital currencies have been gaining popularity worldwide. Chances are that in a couple of years, a digital currency may be included in the list of global reserve currencies.
Tatsiana Ketrar
