You’ve undoubtedly heard of it: cryptocurrency. Or at least: the bitcoin. Is a bell ringing yet? It’s a huge hype right now. Investing in a digital currency. Because savings rates are getting lower and lower and people are looking for new ways to invest money. But what exactly is a bitcoin and what can you do with it? We explain it to you.
Investing in cryptocurrency: what is it actually?
Bitcoins. Blockchain. Cryptocurrency. It seems as if everyone knows something about it these days and has something to say about it. But what exactly does it mean? Cryptocurrency literally stands for ‘cryptographic currency’: encrypted money. You can buy this computer money online and add it to your digital wallet, just as you would keep your paper money in your wallet. A big difference with ‘normal’ money, in addition to the fact that you cannot hold it, is that there is no bank involved in buying or selling digital money. Bitcoin and other cryptocurrency
There are different types of cryptocurrencies. The best known is the bitcoin. It is the largest coin on the market, with the largest total power. The bitcoin is therefore also the most popular and chances are that you have heard of this coin. Some people think that bitcoin is the covering term, but bitcoins are therefore part of cryptocurrency. After bitcoin, Ethereum is the largest cryptocurrency and there are a few hundred other alternatives, such as Dash, Ripple, Litecoin and Monero.
The transactions of cryptocurrency go through blockchain technology: a database and infrastructure to be able to carry out encrypted transactions without an intermediary. That sounds complicated, and it is. The bottom line is that you can theoretically and anonymously pay with your cryptocurrency via blockchain. Blockchain technology is known to be an encrypted way to carry out transactions. But how safe is it really? Certainly not risk-free
In recent years, cryptocurrencies have experienced explosive growth but also a sharp decline. You may know people who have either made a decent profit or a hefty loss with cryptocurrency.
Investing in cryptocurrency is therefore quite risky. In addition, there is no way of supervision (so also no supervisory body), you manage your money on your own responsibility. The AFM and European regulators have therefore warned against trading in cryptocurrency. sometimes scam
Sometimes coins are put on the market, which ultimately turn out to be a scam It has happened more than once that people lose all the money invested in the coin in one fell swoop in this way. Susceptible to hackers
In addition, for example, online wallets are hacked so that someone loses all their online money. Or people lose their digital key (for example, by accidentally deleting a message) so that they no longer have access to all their money.
Would you dare to invest in cryptocurrency? Or maybe you’re already doing it? Let us and the other community members know in this cryptocurrency topic. So why would you want to invest in cryptocurrency?
Big profits appeal to the imagination. And because you can get in online with any amount, the threshold may not be that high. In addition, you pay relatively low transaction costs, because there is no intermediary through whom you have to make a transaction.
However, you do pay a fee for ‘mining’, very briefly that is the process by which the blockchain is maintained. For this, heavy calculations have to be made, and in exchange for this mining, you as a crypto investor pay a part of your cryptocurrency. Exactly how much that is depends on a number of things. How fast you want to send your cryptocurrency, for example. Still invest?
Despite the risks, this way of investing is rapidly gaining ground. That is probably due to the fact that there are people who have earned a lot of money very quickly. These success stories are widely reported in the media, so that other people also want to benefit from them. But at the same time, there are also stories in the media about people who have lost everything. That is the other side of the coin.
If you also decide that you would like to invest in cryptocurrency, we cannot give you any advice. But we do have some general tips, which we want to give you in any case.
Tip 1: Make sure you are aware of all the opportunities and risks that cryptocurrency entails. Because cryptocurrency is not traded through a bank, there is also no supervision of it. So you are responsible yourself.
Tip 2: Only invest money that you can miss for a while, just like investing. If you think you need your money in the short term, this is not a good investment for you. After all, there is still a lot unknown about the cryptocurrency.
Tip 3: Choose a strong password for your account and make regular backups of your wallet. There are several stories of people who lost their cryptocurrency because they forgot their passwords and of people whose computer money was stolen by a hacker. So pay attention, because gone is gone and you can’t hold anyone liable for your loss.
Tip 4: The price of the digital coins is currently going up and down enormously. Keep that in mind, investing in bitcoins or other cryptocurrencies does not offer any guarantees. Investing money: what about you?
Are you looking for a smart way to invest your money and is cryptocurrency too unstable for you? You can invest via Knab. Or also think about investing via Knab Crowdfunding. Here you can achieve an attractive gross return by investing in projects of entrepreneurs. You can invest from as little as € 100: you can spread your investments over different projects.
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