What is Cryptocurrency is a digital currency that uses a cryptographic system as a protection system so that transaction processes can be carried out safely. The definition of Crypto is a currency used for various digital transactions, but as time goes by, more and more people are interested in investing in Crypto in the long and short term. If you are also interested in investing in this one instrument, let’s talk more about what Cryptocurrency is and the types of Cryptocurrency that can be your long and short-term investment choice.
What is Cryptocurrency is a digital currency investment instrument that the public has much loved in recent times.
Because of the potential for high returns and easier access, Crypto is an investment instrument increasingly in demand by investors.
This means that Cryptocurrency is an investment instrument that can provide investors with benefits in the short and long term.
The definition of what is Cryptocurrency or what is Crypto is a digital currency that uses a cryptographic system, often also known as the blockchain, as a system that maintains the security of this digital currency.
If you want to invest in this instrument, let’s discuss what Cryptocurrency is, how to play cryptosystems, and what types of Crypto are suitable for your investment.
What is Crypto or Cryptocurrency Money?
Understanding Cryptocurrency as quoted from Investopedia, what is Crypto or what is Cryptocurrency is a digital currency guaranteed and monitored by Cryptography. This system protects data from security threats such as hackers.
With impenetrable protection, these virtual assets are extremely difficult to manipulate.
In contrast to conventional currency, Crypto or Cryptocurrency is a currency with no physical form. In addition, where Cryptocurrency transactions are only in the online market.
Even though it is only ‘legally’ used as a transaction tool in cyberspace, you can still exchange Cryptocurrencies for fiat currencies such as Rupiah, Yen, Dollars, and others.
So, Crypto is a term used to describe various types of digital currency, not just Bitcoin. This often happens because Bitcoin is a digital currency with a value of almost 70% of the total value of the global crypto market.
Apart from that, you must often hear the term mining crypto or the process of mining crypto, right? This term has recently become increasingly popular because many people occupy this activity. After all, it is considered to have the potential for lucrative long-term profits.
Therefore, let’s first discuss what crypto mining is and what the actual process of crypto mining is.
Process and Method of Mining Cryptocurrency
Currently, Cryptocurrency mining is something that is increasingly lively and is actively engaged in by many people. Even several countries have banned Bitcoin mining because it was feared that it could cause various problems. After all, this digital asset mining process consumes a lot of energy.
Bitcoin involves two basic activities in the process: conveying and verifying information, which consists of a lot of software around the world to ensure that every transaction is recorded and cannot be traded twice.
This process is called “mining,” which is the act of recording every transaction into the blockchain so that everyone has the same information.
However, adding to the blockchain is not easy because it requires complex calculations requiring high-spec software.
Therefore, mining cryptocurrencies such as Bitcoin requires quite a large amount of capital because it is necessary to provide software with high specifications.
The Type of Cryptocurrency with the Largest Market Cap
Most of you are familiar with Bitcoin. Yes, this virtual currency that is currently popular is one of the thousands of types of Cryptocurrency circulating in society.
Reporting to nerdwallet , the number of types of Cryptocurrency is more than 2,200. All of these can be bought, and the amount of public interest in these currencies is why cryptocurrencies are increasingly popular.
The oldest and most popular type of Cryptocurrency is Bitcoin. Many people know the name Bitcoin before Crypto itself. This digital currency first appeared and was introduced by Satoshi Nakamoto in 2009.
Since its first appearance, Bitcoin has been a currency that many people have liked because of the ease with which it can be exchanged with fiat currencies such as the Rupiah and Dollars. Not only that, but the transaction fees are also relatively low, and many e-commerce accept this currency as an economical medium of exchange.
Apart from Bitcoin, this type is also the one people are talking about. Unmitigated, around 84 million more LTC are now circulating in the virtual market. This proves that people are satisfied with the performance offered by Litecoin.
Introduced in 2011 by Charlie Lee, Litecoin is a derivative of Bitcoin Core QT. That is, this currency is a ‘refined’ version of Bitcoin. There are several differences from Litecoin, which is cheaper, faster, and more practical.
In 2013, a 19-year-old developer from Russia named Vitalik Buterin started building Ethereum. Two years later, in 2015, Ethereum officially took the floor in the virtual market as a digital currency.
The public loves Ethereum because its disbursement is relatively easy and fast. Apart from that, Ethereum also has an excellent feature called Smart Contract. This feature is an agreement that protects the seller and the buyer. Because of this feature, Ethereum is more flexible and can be used beyond its function as a Cryptocurrency.
Profit and Loss Cryptocurrency
Like two sides of a coin, Cryptocurrency has advantages and disadvantages. An explanation of the advantages and disadvantages that Crypto has is as follows.
- Practical: The convenience offered by Crypto is that transactions do not need the help of third parties such as banks. Apart from that, there are no complicated requirements that you must comply with in order to transact and own Crypto. This is, of course, different if you want to become a bank customer, which has a myriad of requirements to fulfill.
- ** Fast: ** When compared to international transactions through banks, it should ideally take you more than one day to do it. With Cryptocurrency, these transactions can be trimmed even in minutes.
- Protected from Evil Hands: As explained above, all Cryptocurrencies are protected by Cryptography which makes you not have to worry about your faith.
- ** Vulnerable to Use as Illegal Transactions: ** Because of its existence, which is difficult to track and access by outsiders, many bad people out there use this digital currency for illegal online transactions.
- ** No Authority Body: ** All Crypto transactions are recorded and stored by a Blockchain system. That is, there is no human-led authority to oversee the running of this currency.
- ** Many are still said to be illegal: ** Because there are no physical goods, currently, Crypto is a digital currency that is still not fully accepted in society. Even many people still consider Crypto as illegal goods.
- ** Passwords are Important: ** Before buying Crypto, you must make a good note of the password you will use. The reason is if you forget the password you have, all the money you have will be gone ****.****
Crypto Investment Tips
Aside from being a transaction tool, Crypto is an investment option that is popular with the public. The ease of transactions and the promise of high returns have made investors, especially millennials and gen Z, attracted a lot of this digital currency.
Crypto is an alternative investment whose prestige has been getting stickier since the 2021 pandemic took place. Like other investment tools, of course, you need to know the ins and outs of Cryptocurrency. Don’t let your intention to invest. Just follow the trend.
The explanation of Crypto investment tips is as follows.
Don’t panic when you get down.
It should be understood that Cryptocurrency is a high-risk, high-return investment tool that has high fluctuations. Don’t panic when the money you have suddenly goes down. Wait for the right moment to make a decision. This is because what has decreased is the value, not the number of coins you have.
Hold For The Long Term
Some people invest in Crypto for the short term. This is reasonable, given that these virtual assets fluctuate rapidly. If you pay attention, Cryptocurrency actually has potential for a long time. Especially with the relatively high transaction fees, holding it patiently was a reasonable decision.
As with other investment tools, you need to diversify. Don’t just focus on Bitcoin. Look for other digital currencies that have investment potential. At least you have an alternative if one of your coins suffers a loss.
Understand and Know the Products
As mentioned above, more than 2,200 types of Crypto are currently circulating in the virtual market. Of the hundreds of thousands of styles, choose coins whose regulations are correct. In addition, make sure they are already in the Blockchain system.
Diversification in Investment
In investing, you may include Crypto as one of the instruments that adorn your investment portfolio. However, you must not forget to diversify to more stable and secure instruments as your risk mitigation strategy.
Is Long-Term Crypto Investment Suitable?
Because Crypto is an investment instrument that has high volatility, Crypto is an instrument that is more suitable for short-term trading or investment. Apart from that, diversification is the easiest strategy to minimize the risk of loss from fluctuations in Crypto values.
If you are looking for a promising investment instrument for the long term, then you can take part in a business venture through equity crowdfunding which can give you promising benefits in the long term.