What is Cryptocurrency?
Cryptocurrency is a digital currency that is stored in a computerised database. It uses powerful cryptography which makes it secure. In the case of fiat currency, money is physical and can be carried around. But what is fiat currency? Fiat currency is the currency that is government-issued. It is not backed by any asset and is controlled by the government.
When it comes to cryptocurrency, all the payments are completely digital and these transactions are recorded in a public ledger. In usual banking transactions, there would be bank interference to verify the transactions. But cryptos do not depend on banks for transaction verifications. Anyone, from anywhere, can send and receive money using this peer-to-peer system.
Cryptocurrency transactions are encrypted. This implies that complex coding is used to store and send bitcoin data between wallets and public ledgers. The encryption’s goal is to ensure security and safety.
Is Crypto safe to buy?
Blockchain technology is commonly used to create cryptocurrencies. The term “blockchain” refers to the method through which transactions are recorded into “blocks” and time-stamped. The Digital ledger of bitcoin transactions makes hackers find it difficult to hack into/manipulate.
Furthermore, transactions need a two-factor authentication procedure. To begin a transaction, for example, you may be requested to enter a login and password. Then, you may be required to provide an authentication number delivered to your personal mobile phone through text message. All of this makes crypto safe and secure to buy and transact.
Cryptocurrency exchanges are prone to hacking and other forms of criminal behaviour. Due to these security breaches, investors who lost their digital currencies have suffered significant losses.
Cryptocurrencies are difficult to store safely. Although cryptocurrency exchanges make it very easy to acquire and trade crypto assets, many users choose to not retain their digital assets on exchanges owing to the danger of hacks and theft described earlier.
Tough security measures are being taken while storing and transacting cryptos. But that does not mean that cryptocurrencies are not prone to hacking. In the past, some serious thefts have wreaked havoc on bitcoin businesses. In 2018, hackers stole $534 million, and $195 million were stolen from Coincheck and BitGrail respectively. According to Investopedia, this makes them two of the largest cryptocurrency thefts of 2018.
Also, there is no guarantee that a cryptocurrency project you invest in will thrive. Thousands of blockchain ventures compete for attention, and the crypto market is littered with enterprises that are nothing more than frauds. In the long term, only a few cryptocurrency initiatives will succeed.
Regulators may potentially target the whole crypto business, particularly if countries come to regard cryptocurrency as a danger rather than a cutting-edge technology.
Furthermore, because cryptocurrencies are based on cutting-edge technology, they pose a risk to investors. The majority of crypto technology is still in development and hasn’t been properly tested in real-life circumstances.
How to Invest in Cryptos Safely
1. Research on Crypto Exchanges before Investing.
2. Check the goal of the crypto before buying it.
3. Diversify your crypto investments.
4. Be ready for the unexpected.
Whether it is cryptocurrency or stocks, every investment comes with a certain amount of risks. You can avoid that by doing proper research before buying them. You buy and trade cryptos here