Crypto is one of the hottest topics in finance. But what does it really mean? And should we invest in it? That depends on who you are and what your financial goals are, but there’s a lot to know about crypto before deciding how to proceed. In this article, I will explain what crypto is, why it has become so popular over the past decade or two, and then give an overview of some of the risks involved with investing in crypto.
Cryptocurrencies are digital or virtual tokens that use cryptography to secure their transactions and to control the creation of new units. Bitcoin, the first and most well-known cryptocurrency, was created in 2009. Cryptocurrencies are decentralized, meaning they are not subject to government or financial institution control. This makes them attractive to some investors because they offer a level of anonymity. However, it also makes crypto a target for criminals and hackers because the transactions are difficult to trace.
Cryptocurrencies have been gaining in popularity since 2009, but it wasn’t until 2017 that they began making major gains against traditional investments like stocks and bonds. During this time period coin prices more than doubled before starting to fall around the beginning of January 2018. Despite the recent downturn, many investors are still optimistic about crypto and see it as a potential long-term investment opportunity.
Why Have Cryptocurrencies Become So Popular?
There are multiple reasons why people have flocked to this type of investment. Some investors think cryptocurrencies will replace fiat money in the future while others are attracted to the potential for huge profits. Cryptocurrencies are also a new and exciting technology, so there is a lot of curiosity about them.
Another reason why this technology became so popular is that many industries caught the hype and started to adopt this tech into their business. For example, online shopping and gambling industries are the first adapters for crypto. You can easily find many shops that accept Bitcoin as a payment method. Gambling also shows no sign of slowing down in fully emerging crypto into their community. There are more and more sports bookmakers which focus on crypto as their currency rises in recent years (source: https://smartbettingguide.com/crypto-sports-betting/).
But as a new invention crypto also has a lot of risks that come with it. One example: In December 2017, a South Korean cryptocurrency exchange called Youbit filed for bankruptcy after being hacked twice in the span of one year. Hackers steal cryptocurrencies by using viruses to take control of computers through phishing or the exploitation of vulnerabilities in the code that underlies these virtual currencies. Once hackers have access, they can transfer funds out of a cryptocurrency wallet without requiring a password.
What Are The Risks Associated With Investing In Crypto?
The biggest risk is that the value of cryptocurrencies can be extremely volatile. Prices can go up or down very quickly, making it difficult to predict what will happen next. There is also a high risk of fraud with cryptocurrencies, as there have been many cases of fake or scam coins being issued. Additionally, investing in crypto is not as regulated as traditional investments, so there is more risk involved in terms of getting your money back if something goes wrong.
Whether or not you should invest in crypto depends on a variety of factors, including your risk tolerance, financial goals, and knowledge of the market. Cryptocurrencies are a new and exciting investment opportunity, but they also come with a lot of risks. If you are thinking about investing in crypto, it is important to do your research and understand what you are getting into.