Many people consider the cryptocurrency boom of 2017 to be one of the most exciting and disruptive events to ever happen in the financial world. However, some experts think that these types of financial instruments might not be all they’re cracked up to be – or, at least, not in their current state. Here are some reasons why we might be seeing the end of the crypto boom.
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What is cryptocurrency?
Digital or virtual money that employs cryptography for security is called cryptocurrency. This security feature makes cryptocurrencies hard to counterfeit. A cryptocurrency’s biological character, which distinguishes it from other forms of money and maybe its most alluring quality, makes it potentially impervious to intervention from or manipulation by governments.
Although Nakamoto claims to be a Japanese guy born on April 5, 1975, there are rumors that he is one programmer or a group of programmers dispersed over North America or Europe who have an interest in computer science and encryption. The initial blockchain database and the double spending issue were reportedly solved by Nakamoto before anybody else in the history of digital money. The identity of Bitcoin’s founder is unknown, but that hasn’t stopped the virtual currency from gaining acceptance from consumers, companies, and even governments despite its Wizard of Oz status.
Does it have potential in the future?
When it comes to cryptocurrency, it’s impossible to say for certain what the future holds. Some experts believe that the crypto boom is over, while others believe that it’s only just beginning. Personale that cryptocurrency has a lot of potential. Here’s why in recent years, we’ve seen Bitcoin lose its luster as other cryptocurrencies have stepped in to take its place. Some argue that this shift means the crypto boom is over and investors should avoid getting involved. However, many analysts predict this shift will lead to even more innovation and growth within the crypto space and attract more investors than ever before.
How can I get started investing?
Digital or virtual tokens that employ cryptography for security are known as cryptocurrencies. They are decentralized, which means that neither the government nor financial institutions have any influence over them. In 2009, Bitcoin, the first and most well-known cryptocurrency, was created. Since then, several other cryptocurrencies have been created. Here are some options to get started investing in cryptocurrencies. How you decide to invest will be a matter of personal preference and risk tolerance. Many people prefer to own their cryptocurrency outright, while others prefer to use a third-party platform to make crypto purchases using U.S. dollars or other fiat currencies. You should know that some of these platforms charge transaction fees and issue refunds in virtual currency instead of in U.S. dollars or other fiat currencies, meaning you could end up paying fees twice: once when you buy your digital tokens and again when you convert them back into another currency for withdrawal, if applicable.
Are there alternatives to cryptocurrencies that might be safer investments
Aside from? the sheer volatility of the market, some other risks and concerns are coming in cryptocurrencies. These include:
- The possibility of a 51% attack, in which a group of miners could control the majority of the network and therefore manipulate prices.
- The risk of hacks and security breaches, as we’ve seen with exchanges like Mt. Gox and Coincheck.
- The fact that many ICOs are scams, or at least not as legitimate as they claim to be.
- Regulatory uncertainty, as governments around the world, are still trying to figure out how to deal with cryptocurrencies.
- The possibility that Bitcoin or another cryptocurrency could simply become obsolete as new technologies emerge.
All of these factors make investing in cryptocurrencies a risky proposition.
Other risks and concerns
The cryptocurrency boom may be over, but that doesn’t mean there isn’t still money to be made in the market. Here are some other risks and concerns to keep in mind before investing Basing your decision on a hunch or intuition can be a huge mistake. Read up on different strategies for trading cryptocurrencies so you have a well-rounded understanding of how they work and what the pros and cons are.
Cryptocurrencies aren’t FDIC insured, so you need to invest only what you can afford to lose—no matter how tempting it is at the time.
Don’t forget about taxes! You may not know it yet, but most exchanges send 1099-K forms from customers who traded $20,000 or more during a calendar year (this includes trades on margin). If this applies to you, make sure you understand how this impacts your tax liability ahead of time by consulting with an accountant.
Conclusion
The cryptocurrency boom may be over for now, but that doesn’t mean it’s the end of cryptocurrencies. While the value of Bitcoin and other cryptocurrencies has fallen sharply in recent months, there are still many believers in the technology. And with new applications being developed all the time, it’s possible that we haven’t seen the last crypto boomjust yet.
What’s your opinion on cryptocurrency investing in general, and do you think we’ll see another crypto boom sometime soon? Let us know in a comment below!
