Cryptocurrency: how to buy it safely?
There are different options. You can use the services of online exchangers, which act as an intermediary between the seller and the buyer. You start a virtual cryptocurrency wallet, register in the exchanger, conduct the transaction, and then the cryptocurrency is sent to your account. Another way: to open an account on a cryptocurrency exchange, deposit it (can be in local currency) and buy the assets you need (tokenized shares, cryptocurrencies) which are listed on the exchange (listing is a list of assets which are available for trading on a particular cryptocurrency exchange). In this case, the choice of coins will be much wider than in the exchange. Large crypto exchanges may have hundreds of different “digital” assets in their listings. In addition, there are much more trading opportunities there than in exchanges.
Can cryptocurrency be used for payments for goods and services?
You can, but rarely and not everywhere. Cryptocurrencies are rather a tool for investments and means of saving capital. Transactions in Visa and Mastercard systems take a fraction of a second. Confirmation of funds transfer from one bitcoin purse to another can wait tens of minutes (but at the cryptocurrency exchange transaction occurs instantly). Paying for goods and services in bitcoins is not a good idea. New altcoins appear all the time, the confirmation of which is much faster than in the bitcoin or ether blockchain. Nevertheless, today, cryptocurrencies are primarily an asset for investing, trading and earning much more than income from deposits in banks.
What is more profitable, investing in cryptocurrencies or just putting money on deposit?
A deposit is easy and cheap. The bank can give you 10% per annum, but considering the inflation 3-5% and taxes…. Not the most tempting investment. It’s a different story with cryptocurrencies. Yes, the market is still very volatile (the level of price change per unit time can be very high). Bitcoin can rise or fall by 10% in a day. At the same time, investing in cryptocurrency can bring a much bigger profit than companies’ stocks, raw materials or deposits. Two examples. Number one: in 2020, Tesla posted its first-ever profit of $700 million, while at the same time, the company’s bitcoin investments brought it $1 billion in just two months. Example number two: In August 2020, an investor bought the “meme” cryptocurrency Shiba Inu for $8,000. By November 2021, they had turned into $5.04 billion.
But cryptocurrencies, they’re nothing more than lines of code, they’re not backed by anything?
That’s right. Neither is fiat, money issued by the central banks of different countries. Symbolic, paper money, unsecured. Whereas government currencies used to be backed by gold, since the early 1970s, when the United States refused to exchange gold for other countries’ currencies, government money has become nothing more than paper money.
What then is the advantage of bitcoin?
No regulator and no inflation. Bitcoin is decentralized. No government or central bank can artificially change its value. Only two factors influence bitcoin’s price: supply and demand. Only the market determines the value of this crypto-asset. In addition, bitcoin issuance is programmatically limited. In total, 21 million BTC will be issued and not one satoshi more (a satoshi is a bitcoin’s changeable coin equal to 0.00000001 BTC). After that, the amount of bitcoins in circulation will steadily decrease. As of today, about 18 million BTCs are mined and, by different estimations, from 4 to 6 million of them are lost. That is, they are there, but no one can use them. Therefore, if bitcoin becomes firmly established as a means of saving capital, its price will inevitably rise and the number of coins in circulation will decrease.
