What is cryptocurrency?
Here’s a video explaining the digital currency in its simplest form.
Why should I trust your take on cryptocurrency?
Investing in places such as stocks and mutual funds are not new to me. The volatility of all these investment chances gives quite a thrill, no matter how much you are putting into the investment. However, I have been recently more involved and gaining interest in cryptocurrencies, a different type of investment. Many people may be missing out on the chance of picking up something new to do, and I want to share this information with others. Given the opportunity to create a research project on a subject related to my major, I have gathered quite a bit of information about cryptocurrencies and their applications. Though you are free to surf the web for an abundance of information on the topic, I hope you can learn something from me, and maybe my opinions will help you formulate your own.
What are some uses for cryptocurrencies?
Financial Gain
For one, regular people like you or me, can potentially gain from the volatility of cryptocurrency, similar to other investments. Speculation, or the act of buying or selling an asset in hopes of gaining profits, is a common use of digital tokens. Many hope they will make some amount of money on platforms such as Gemini, Coinbase, or even Robinhood in the hopes of their assets appreciating or increasing in value. Though this can benefit those who invest financially, it is important to take caution when one invests their money in a newer industry with unpredictable changes in value.
Sending and Receiving Money
A second use of digitalized tokens, is the ability to send or receive money with security and can make way for newer ways of transference compared to traditional methods. This may possibly replace individual trust in credit unions or banks, something that can be minimized with the technology that crypto is used on (Pernice, 2021). Financial institutions and businesses were scorned in response to the 2008 financial crisis and left many people wondering whether or not they could be trusted. The platform which cryptocurrency runs on, the blockchain, records transactions which cannot be changed and can be viewed by the public, allowing transparency with every step of the way. Its comprehensive procedure and network allows activities and more importantly transactions to be very secure. Though this technology most likely will not replace traditional methods of sending or receiving money, its functionality should not be overlooked.
Business Applications
Lastly, crypto can even assist businesses in prospering, as exhibited by the Helium project. The Helium project is a internet hotspot provider that gives users cryptocurrency called $HNT as a reward for using their platform. Prior to this implementation, the creators of the project knew their idea wouldn’t be as successful as they wanted, but they soon realized the huge market in cryptocurrencies. People are incentivized to use their services in the hopes of getting digital tokens and it is a unique way to put themselves out there. With cryptocurrency being incorporated in everyday businesses, what other applications can the technology have?
What would regulation in the field do?
The U.S Securities and Exchange Commission is a government agency which seeks to protect investors who deal with securities like stocks or bonds. Recently, they have been discussing the need for greater regulation in the cryptocurrency industry due to an abundance of illegal activity and fraud which could harm investors. In a recent statement by S.E.C Chairman Jay Clayton, these cryptocurrencies could be deemed as securities and investors who have bought or sold the coin would be breaking securities laws, as they generally require licenses to do so. Personally, I believe these regulations could be beneficial for investors in that they will give additional security, yet this could defeat an important purpose of cryptocurrencies that eliminates a middleman in dealing with digital currency.
Should I invest or look into these tokens?
There are many factors to consider when looking into a new technology or investment instrument. There are numerous reasons as to why one should look into the digital tokens, like transferring money or possibly gaining (or losing) money, giving strong reasons to invest. Currently, lots of investment options such as stocks, bonds, or digital tokens are taking a hit due to COVID and many have lost major parts of their investments. Though these detrimental lows are likely to only stay temporarily, caution should be taken when looking into digital tokens or any other investment for that matter.