However it certainly can be used for buying goods and services. As you know that the cryptocurrencies only exist at digital platforms so for the regulation of these transactions, an online ledger is systematically maintained which is absolutely power packed with cryptography for ensuring the security of online transactions.
These cryptocurrencies are not at all governed or regulated by any of the central government authorities of any particular economy. So they are traded freely mostly by the speculators with the intention of earning profits which drive prices skyward. From all the traded cryptocurrencies at different crypto exchanges, Bitcoin is the most famous one which is considered as the golden digital coin. This digital coin usually faces the maximum price volatility where it reaches nearly $65,000 in April 2021 and loses nearly half of its value within one month. Currently, the price of bitcoin has again reached in the range of $45,000.
Further, there are a few key aspects that you really should know to decide whether you can choose cryptocurrency as a payment method or as a source of investment as well.
Different Cryptocurrencies And Their Worth:
At present, there are more than 10,000 different types of cryptocurrencies which are traded publicly at various different cryptocurrency exchanges. These digital currencies are rapidly growing since its evolution in 2009 and raising its value as well through ICOs (Initial Public Offering). The overall value of all the cryptocurrencies reached upto $2.2 trillion in April 2021 which situationally went down to $1.9 trillion in August 2021.
Now if we only consider the value of the most popular digital currency i.e. bitcoin then it is covering the $1.2 trillion from the total market share of all digital currencies. However this value was recorded in April 2021 which also went down and reached $849 billion in August 2021.
How Cryptocurrencies Become So Popular?
Although there are so many people who haven’t accepted digital currencies as a good source of investment neither do they recognize these as crypto payments. However there are many others who absolutely support due to the following reasons:
- The reason is that they are visualizing digital currencies especially Bitcoins as the future currency and presently focusing on buying it now. Because the assumption is that the value of Bitcoins is going to rise in the coming future.
- The second major reason is there is no central official authority or any other third party involvement which is regulating this exchange system. And this direct settlement mechanism is absolutely reducing the overall transactional cost.
- The next reason behind the popularity of cryptocurrencies is the blockchain technology which ensures better transaction security as compared to the traditional payment systems.
- Further, there will be no interest on these digital currencies and they really have long term acceptance where you can easily exchange your money against these.
- Furthermore, the digital currencies have great volatility that easily goes up in value.
Cryptocurrencies as - Investment:
If you are thinking about investing in cryptocurrencies then you are certainly required to evaluate the whole digital currencies market scenario before making any investment. Although the value of these digital currencies frequently rises, many currency exchange experts consider it merely a source of speculation but not as real investment. And the reason behind this fact is quite simple and logical as well.
Here when you invest in digital currencies, then you can realize that it doesn’t provide you any cash flow like other securities such as shares and debentures do. So, there will be only capital profits for you if you sell the digital coins at a value higher than you purchase it. And that's why they call it ‘the greater fool’ for earning no dividend or interest at all.
Cryptocurrencies as - Payment Method:
If we technically elaborate the concept of cryptocurrencies then you can view it as a unique line of code. Here every digital coin has its own unique code that cannot be copied at all but it can be traced easily which makes them exclusive.
Here you might be observing cryptocurrencies as modern day gold where people are making (or losing) millions of dollars by investing into it. However these digital currencies are quickly gaining its popularity and being widely accepted as currency at present. And they would become even more prominent in future as they keep earning the trust of the people.
If we talk about the brands then the popular ones like Nordstrom, Expedia, PayPal, Whole Foods, Etsy etc are now allowing people to pay with crypto. Further, two people who recognize the value of tokens can easily exchange it with one another for goods and services. And it also promotes the buying and selling of digital art with digital money over secure platforms.
Conclusion:
Here the bottom line is that the way you choose to make money should be slow and steady. And when we are talking about making money with cryptocurrencies then there are still way too many unknowns that you need to consider well. However it could absolutely become a more legit way to invest but today, as per the current scenario, just say no!