Will cryptocurrencies retain their charm until the end of this year?
Cryptocurrencies are attracting a lot of attention these days, and individuals who wish to invest in the digital currency are curious to know if there is still time to buy and make money out of it.
According to several investigative journalists, Japanese man known as Satoshi Nakamoto is the creator Bitcoin and its technology. But, there’s a very little evidence about his whereabouts.
Getting back to the main topic, the price for one Bitcoin is around £6,000 these days. There are several other popular cryptocurrencies like Ethereum, Zcash, Ripple, or Monero. Ethereum needs a special mention as the currency’s value increased 2,500 percent in just twelve months.
A lot of people from around the world have become rich just because they purchased some of these coins during their initial offering.
Now the question that every potential investor has in mind is about the reliability of these cryptocurrencies. Can they transform financial systems and help more people to change their life’s fortune? To get answers to the above two questions, you need to understand the basics of Bitcoins.
Most of the digital currencies work on blockchain technology that involves peer-to-peer networking and encryption. The Bitcoin owners’ own a digital key that proves the number of Bitcoins that he or she owns. If the user spends the Bitcoin, the concerned person’s computers tell the network about the transfer of ownership using the same digital key.
The record for all the transactions is stored on millions of computers around the world. So, there’s no way to manipulate the same.
How are digital currencies better than common currencies?
Currencies from around the world are controlled by the central banks of the concerned country. Every currency is exposed to censorship. On the other hand, cryptocurrencies are not centralized, so no banks or financial institution can control them. Tracing transactions made using cryptocurrencies remains difficult. In fact, there’s no way to track purchases made using options like Monero due to the way operations are performed.
Ordinary bank transactions can be stopped, freeze, traced, but not the deals performed using cryptocurrencies. Unfortunately, this is the reason; digital currencies are often used by drug dealers, blackmailers, as well as those who wish to evade taxes or are involved in money laundering.
Can cryptocurrencies completely replace usual currencies?
The main problems with Bitcoin transactions are the time required for payment confirmation. As of now, it takes ten or more minutes for approval. So, at present, it may not be possible to use some of the cryptocurrencies for shopping. Plus, its integration with conventional financial systems seems difficult. In spite of this, several large companies like Microsoft and PayPal have started accepting payments in Bitcoins.
Transaction confirmation is taking much more time than the initial expectations. Perhaps, the system is struggling these days due to the amount of daily traffic that the network is getting from around the world.
Bitcoin
Image/CASASCIUS
Bitcoin network’s power consumption
Tech experts have estimated that within the next few months, the overall Bitcoin network would start consuming as much electricity as the amount consumed by the entire Japanese population. The mining process is time-consuming, processor intensive, and wastes a lot of power as well.
Does the rising price of cryptocurrencies indicate their future growth rate?
It is evident various cryptocurrencies have gained popularity around the world and would fetch high rates. They would keep on showing some natural growth and probably does indicate their increasing acceptance.
Some traders often point out that even other cryptocurrencies besides Bitcoins are gaining popularity. However, one must note that to buy other cryptocurrencies, a trader needs to buy Bitcoins first and then trader the same for the desired cryptocurrency. So, other currencies’ boom is actually Bitcoin boom as well.
More and more traders are buying digital currencies with hope to sell the same later at a higher price. This factor is also one of the reasons behind increasing rates of cryptocurrencies. In such situation, it’s for sure that only a few early risers would make money while others may end up losing some if they do not sell the cryptocurrencies that they hold at the right moment.
At present, cryptocurrencies are spending a lot on advertising on social networking sites and even on the London Underground! Thus, there’s a lot of investors money flowing into the concerned eco-system at present. But, a time would come when all these investors would choose to exit and make money out of their investment. If all of them happen to sell their stake at once, the market might crash within seconds. This is possible, and the world recently saw how cryptocurrencies crashed and recovered between December 2016 and March 2018. Anyway, if the question is about cryptocurrencies retaining their charm, they may manage to fulfill investors’ expectation until major economic powers do not ban their trading in the market.
What’s experts’ opinion for investors?
Jamie Dimon from the JP Morgan Chase board suggests investors remain cautious as the cryptocurrencies lack the support from major nations. He believes some of the Bitcoin’s properties are appealing, but it’s not gold. It does not offer financial oversight due to the constant volatility in the exchange rate. Thus, it may not be able to exchange dollars or pounds wholly in the day to day life.
On the other hand, banking experts who wish to remain anonymous suggest that the blockchain technology has its own set of advantages. The present banking systems cannot compete with benefits offered by cryptocurrencies. In the future, the traditional banks may replace their books with blockchain technology.
You can either buy or sell cryptocurrencies using wallets or can also invest in Bitcoin CFDs using platforms like Admiral Markets. You can also find the best bitcoin trading indicators on their multiple applications designed to be used with various computing devices. With CFD- Contract for Difference, you can just make money by speculating if the selected cryptocurrency would rise or fall in the given markets. Instead of going through the complicated process of buying cryptocurrencies, you can buy CFD contract for the desired timeframe instead.
Author: Kavinesh A
photo/ William Iven
