The interest in crypto currencies have been growing tremendously in recent times. A lot of investors have taken notice of the potential impact these
currencies could make in the world's global economy. The use of the currencies is in eCommerce has also
been rising as lot of sites are introducing them as an alternative form of
payment.This brings up the question, what position should a
casual investor such as you and I take? This post aims to elaborate on the future of
these currencies.
So what are crypto-currencies? ("if you already know you may want to skip this section).
Crypto-currencies, are online currencies
(e-Currencies) that have been encrypted usually by an open source community to
enable the owners of these currencies to exchange service or goods without a
financial institution(commonly called middle men). Cutting out this
middle men enables the transactions to occur in real time(very quickly) and at
very low cost.
Are Crypto-currencies safe?
Yes, so far no major fraud has occurred
during these transactions. This is primarily because of the technology and
logic behind it that uses a ledger(a book that keeps accounts of money received
and money transferred). The new owner of any bitcoin transferred is
registered in every body's ledger so that at any point it time no body can
cheat. The encryption also keeps the identity of each bitcoin owner safe by
showing only the account code. This system of processing of monitoring and
updating transactions is known as the block chain. You can read more on their
operation and safety here.
So
what is the future of these currencies? Are they a worthy investment?
These are the next key questions that must be
answered. Most experts in the financial industries agree that these currencies
are here to stay.
Huffingpost identifies
the following as the advantages these currencies have over their alternatives
such as money, e-currencies and e-payment systems.
Fraud: Individuals
cryptocurrencies are digital and cannot be counterfeited or reversed arbitrarily
by the sender, as with credit card charge-backs.
Immediate Settlement:Purchasing real property typically involves some third parties (Lawyers, Notary), delays, and payment of fees. In many ways, the bitcoin/cryptocurrency blockchain is like a “large property rights database,” says Gallippi. Bitcoin contracts can be designed and enforced to eliminate or add third party approvals, reference external facts, or be completed at a future date or time for a fraction of the expense and time required to complete traditional asset transfers.
Lower Fees: There aren’t usually transaction fees for cryptocurrency exchanges because the miners are compensated by the network (Side note: This is the case for now). Even though there’s no bitcoin/cryptocurrency transaction fee, many expect that most users will engage a third-party service, such as Coinbase, creating and maintaining their bitcoin wallets. These services act like Paypal does for cash or credit card users, providing the online exchange system for bitcoin, and as such, they’re likely to charge fees. It’s interesting to note that Paypal does not accept or transfer bitcoins.
Identity Theft: When you give your credit card to a merchant, you give him or her access to your full credit line, even if the transaction is for a small amount. Credit cards operate on a “pull” basis, where the store initiates the payment and pulls the designated amount from your account. Cryptocurrency uses a “push” mechanism that allows the cryptocurrency holder to send exactly what he or she wants to the merchant or recipient with no further information.
Access to Everyone: There are approximately 2.2 billion individuals with access to the Internet or mobile phones who don’t currently have access to traditional exchange, these people are primed for the Cryptocurrency market. Kenya’s M-PESA system, a mobile phone-based money transfer, and microfinancing service recently announced a bitcoin device, with one in three Kenyans now owning a bitcoin wallet. (Let me repeat that again. 1/3)
Decentralization: A global network of computers use blockchain technology to jointly manage the database that records Bitcoin transactions. That is, Bitcoin is managed by its network, and not any one central authority. Decentralization means the network operates on a user-to-user (or peer-to-peer) basis. The forms of mass collaboration this makes possible are just beginning to be investigated.
Recognition at universal level: Since cryptocurrency is not bound by the exchange rates, interest rates, transactions charges or other charges of any country; therefore it can be used at an international level without experiencing any problems. This, in turn, saves lots of time as well as money on the part of any business which is otherwise spent in transferring money from one country to the other. Cryptocurrency operates at the universal level and hence makes transactions quite easy.
There is no other electronic cash system in which your account isn’t owned by someone else.
Take PayPal, for example: if the company decides for some reason that your account has been misused, it has the power to freeze all of the assets held in the account, without consulting you.
It is then up to you to jump through whatever hoops are necessary to get it cleared, so that you can access your funds. With cryptocurrency, you own the private key and the corresponding public key that makes up your cryptocurrency address. No one can take that away from you (unless you lose it yourself, or host it with a web-based wallet service that loses it for you).
Overall, cryptocurrencies have a long way to go before they can replace credit cards and traditional currencies as a tool for global commerce.
Fact is, many people are still unaware of cryptocurrency aka Digital Currency. People need to be educated about it to be able to apply it to their lives. Businesses need to start accepting it They need to make it easier to sign up and get started.
The future appeal of cryptocurrencies lies in allowing you ultimate control over your money, with fast secure global transactions, and lower transaction fees when compared to all existing currencies.
When used properly and fully understood it would be the initiator of many emerging systems that will fundamentally change our global economic system.
Immediate Settlement:Purchasing real property typically involves some third parties (Lawyers, Notary), delays, and payment of fees. In many ways, the bitcoin/cryptocurrency blockchain is like a “large property rights database,” says Gallippi. Bitcoin contracts can be designed and enforced to eliminate or add third party approvals, reference external facts, or be completed at a future date or time for a fraction of the expense and time required to complete traditional asset transfers.
Lower Fees: There aren’t usually transaction fees for cryptocurrency exchanges because the miners are compensated by the network (Side note: This is the case for now). Even though there’s no bitcoin/cryptocurrency transaction fee, many expect that most users will engage a third-party service, such as Coinbase, creating and maintaining their bitcoin wallets. These services act like Paypal does for cash or credit card users, providing the online exchange system for bitcoin, and as such, they’re likely to charge fees. It’s interesting to note that Paypal does not accept or transfer bitcoins.
Identity Theft: When you give your credit card to a merchant, you give him or her access to your full credit line, even if the transaction is for a small amount. Credit cards operate on a “pull” basis, where the store initiates the payment and pulls the designated amount from your account. Cryptocurrency uses a “push” mechanism that allows the cryptocurrency holder to send exactly what he or she wants to the merchant or recipient with no further information.
Access to Everyone: There are approximately 2.2 billion individuals with access to the Internet or mobile phones who don’t currently have access to traditional exchange, these people are primed for the Cryptocurrency market. Kenya’s M-PESA system, a mobile phone-based money transfer, and microfinancing service recently announced a bitcoin device, with one in three Kenyans now owning a bitcoin wallet. (Let me repeat that again. 1/3)
Decentralization: A global network of computers use blockchain technology to jointly manage the database that records Bitcoin transactions. That is, Bitcoin is managed by its network, and not any one central authority. Decentralization means the network operates on a user-to-user (or peer-to-peer) basis. The forms of mass collaboration this makes possible are just beginning to be investigated.
Recognition at universal level: Since cryptocurrency is not bound by the exchange rates, interest rates, transactions charges or other charges of any country; therefore it can be used at an international level without experiencing any problems. This, in turn, saves lots of time as well as money on the part of any business which is otherwise spent in transferring money from one country to the other. Cryptocurrency operates at the universal level and hence makes transactions quite easy.
There is no other electronic cash system in which your account isn’t owned by someone else.
Take PayPal, for example: if the company decides for some reason that your account has been misused, it has the power to freeze all of the assets held in the account, without consulting you.
It is then up to you to jump through whatever hoops are necessary to get it cleared, so that you can access your funds. With cryptocurrency, you own the private key and the corresponding public key that makes up your cryptocurrency address. No one can take that away from you (unless you lose it yourself, or host it with a web-based wallet service that loses it for you).
Overall, cryptocurrencies have a long way to go before they can replace credit cards and traditional currencies as a tool for global commerce.
Fact is, many people are still unaware of cryptocurrency aka Digital Currency. People need to be educated about it to be able to apply it to their lives. Businesses need to start accepting it They need to make it easier to sign up and get started.
The future appeal of cryptocurrencies lies in allowing you ultimate control over your money, with fast secure global transactions, and lower transaction fees when compared to all existing currencies.
When used properly and fully understood it would be the initiator of many emerging systems that will fundamentally change our global economic system.
So how can I invest in these currencies?
I define owning these currencies as an investment
as there is currently sufficient interest in them. These interest will lead to
more and more people demanding for it which will then lead to further rise in
the value of the currencies.
 |
| Price chart of Ethereum from 2015 to date (courtesy of https://www.worldcoinindex.com/coin/ethereum) |
There are three major ways you can own/invest in
these currencies
1. Mining Crypto-Currencies
You can earn from crpto-currencies by helping the blockchain system maintain and verify its transactions. This is basically what mining is all about. This usually requires an hardware that mines(monitors and confirms transactions). As of the time of writing before you can mine crpto-currencies with a mining company you actually need to deposit some amount of money with the company. This money is used to obtain an online platform that has the required resources to mine your bitcoin. Some of the well known mining companies include:
- https://www.genesis-mining.com/
- https://hashflare.io/#plans
- more free and paid sites @ http://bitcoinsearning33.blogspot.com.ng/
For more information on how to mine bitcoins click
here to go to wikiHow or
follow hashing24.com.
2. Offer value or service in exchange for Bitcoins
Another option is to offer value or
service for bitcoins online. These can range from selling of E-books. e-albums.
Proof reading of documents etc so that your clients can then pay you through
your bitcoin wallet. Note: There are platforms that enable conversions
of ordinary currencies to bitcoin so you may have to research on this before
setting up your service.
This becomes an
investment as the demand of bitcoins rises more than the supply through mining
and cash injection.
3. Trade on the Forex/money market.
Bitcoin was
introduced into the financial markets a few years back. Ethereum has can still
be traded online but has not gone global has bitcoin as at the time of
writing. MY RECOMMENDATION.
buy and hold this currencies for the time being (at least 6-a year). The
interest in these currencies is rising hence the market will be bullish for
sometime. On long term I envisage a bubble bust as it is difficult to know the
true value over speculation.
Finally which is a better Investment?
Most experts agree that Ethereum has a better
longterm prospect than Ethereum this is largely due to the following reasons.
1.
With
Ethereum you can exchange like for like instruments. so lets say I have a stock
and what to exchange it for another stock, I can do so with this crypto
currency.
2.
Ethereum
is said to use a better technology than bitcoin. The passing of these
information alone is bound to boost its value as more people will be attracted
to it than bitcoin.
3.
Ethereum
has been endorsed and implemented by some major financial banks such as
Barclays, J Morgan etc Read news here.
Their status and expertise was said in that article to cause a market surge of
up to 2000% in the first 5 months of 2017 only.
see
more technical stuff on https://ethereum.stackexchange.com/questions/390/what-advantages-and-disadvantages-does-ethereum-have-over-bitcoin.
Conclusion
While the prospect of these currencies may be huge
and attractive I cannot over emphasize the importance of you not being carried
away by the hype. Most marketers of these currencies have vested interests as
increase in interest equals increase in valuation of these currencies. More so,
some of them such as Ethereum don't have sufficient liquidity (total cash in
the circulation) to handle big transactions. This was what lead to the crash
of Ethereum in
June 2017. As for some good broker like Alpari , Tick mill you can see their review here that trade crypto-currencies you can see them here.
Have a lovely week ahead of you.
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