With Bitcoin prices reach all-time-highs and even beauty and lifestyle influencers speaking about Bitcoin, cryptocurrency has become a much-talked-about topic. If you're considering to start buying cryptocurrency, it's better if you understand what it even is. Here are a few things you need to know about cryptocurrency:
What is Cryptocurrency?
Also known as digital currency or virtual currency, a cryptocurrency is a digital asset that can be used to exchange for goods and services or in place of a contract. This digital asset is secured by cryptography, making it nearly impossible to counterfeit or hack.
Most cryptocurrencies are decentralized networks based on distributed ledgers made up of several different computers (blockchain). Their encrypted and decentralized characteristics make most types theoretically immune to manipulation and interference.
Most common types of cryptocurrency
While Bitcoin is the one that most people are familiar with, there are actually over 6,000 different cryptocurrencies traded publicly.
In total, the industry is worth over $645.7 billion, with around $421.7 billion coming from Bitcoin -- this is according to CoinMarketCap.com. Apart from Bitcoin, some of the most popular altcoins are Ethereum (ETH) and Bitcoin Cash (BCH).
Advantages of cryptocurrency
One of cryptocurrency’s biggest appeals to early users is its decentralization. The idea of a currency that is not controlled by a singular government or controlling body made it very attractive to many individuals.
But those who don’t fully understand how this aspect of crypto works are more attracted to the promise of easier transfer of funds between two parties without extremely high fees. Since a central bank, credit card company, or another third party is not needed in the transaction, transferring funds from anywhere in the world to anywhere in the world is seemingly simpler and cheaper.
Disadvantages of Cryptocurrency
Before you buy any type of cryptocurrency, you first must understand that these carry a great amount of risk as their very nature makes the prices highly volatile. This is because, for most cryptocurrencies, the value is dependent on supply and demand. This is why you can see prices go to extreme highs and lows much more rapidly than traditional (fiat) currencies (e.g. USD, PHP).
There’s also the fear of the semi-anonymous nature of cryptocurrency. While anonymity gives people a sense of security with individual transactions, the more privacy-oriented altcoins open the possibility for illegal activities like tax evasion and money laundering.
Buy and Sell Cryptocurrency with Coins.ph
If you’ve decided to buy cryptocurrencies, be vigilant against scams and only transact using legitimate platforms. Although cryptocurrencies are generally not controlled by a single authority, some central banks such as the Bangko Sentral ng Pilipinas (BSP) have issued virtual currency regulations and require a license for cryptocurrency wallet providers and exchanges to legally operate.
Disclaimer: The information and publications in this article are not intended to be and do not constitute financial advice, investment advice, trading advice, or any other advice or recommendation offered or endorsed by Coins.
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