Cryptocurrency is everywhere at the moment, but what is it? Should you buy some? can you make money from it? read more below to find out.
With any financial decision you should always know what you are spending your money on and what value it has. Cryptocurrency is a very fluctuant asset at the moment and the price of it shifts regularly from day to day.
What is it?
Cryptocurrency is a digital form of online currency, intended to replace or work alongside the existing fiat money system. At the moment you can purchase cryptocurrency using fiat money from online exchanges such as Coinbase or from individuals using LocalBitcoins.
In theory these cryptocurrencies can be used to make purchases just as you would with regular cash, however at this time they are not widely excepted by businesses/individuals.
Just like exchange rates with foreign currencies the price of cryptocurrencies are not fixed and tend to fluctuate on a day to day basis depending upon news and supply and demand. Cryptocurrencies however tend to fluctuate much more than fiat currencies on a day to day basis.
Cryptocurrencies are held in digital wallets similar to real wallets where you have a balance which you can then send to other peoples wallets.
You can read more about what cryptocurrencies are and how they work here.
Can you make money from cryptocurrencies?
In a word, yes you can but like any investment you can also lose money. So be careful if you are intending to purchase some cryptocurrency, make sure you have a good understanding of the cryptocurrency you intend to purchase. Good things to look at are the technology behind it, how it works and what its performance has been in the past. It is also a good idea to read news articles related to the cryptocurrency you intend to purchase to get a good idea of what others think about it.
Trading cryptocurrencies is no different to trading fiat currencies, just like fiat currencies can go up and down in value so can cryptocurrencies so always be careful when purchasing.