The term “cryptocurrency” refers to coins that have the properties of standard paper-based money. They are an investment option, with characteristics that function as a store of value, a unit of account, and fungibility.
You probably want to be familiar with the concept of cryptocurrency in considering your investment planning. When looking at ways to begin the investment process, you may wonder what crypto is and where it came from.
Cryptocurrency began in 2008 when an anonymous author going by the pseudonym Satoshi Nakamoto published a white paper detailing the mechanics of cryptocurrency. In 2009, the currency began being used when it was released as open-source software.
Since its release, cryptocurrency has only continued to grow in popularity. With such a rise, you may be wondering how you can get involved in this new investment and if it is worth your time. Potential investors should be wary of the potential for cryptocurrency fraud and COVID-19 fraud.
For starters, what is crypto?
That 2008 white paper resulted in what became known as Bitcoin. While Bitcoin is still the most prominent cryptocurrency, there are now around 6,000 cryptos in existence.
Crypto tokens like Bitcoin or Ethereum are representations of value built on blockchain. Blockchain is a shared database, differing from regular databases by how data is stored.
Blockchains store data in blocks, which are linked together using cryptography. As data comes in, it is stored in a new block. Once each block is filled with information, it is chained to the previous block. It is not controlled by any person, government, or bank and is similar to open-source software and operating systems like Linux.
Applications for a Variety of Industries
Blockchain technology is still in the early days of development, with issues that need to be addressed before it goes mainstream.
One of the biggest challenges to the broader technology adoption is the vast amounts of energy required to power the computers used with blockchain. Also, blockchain currencies available now can’t trade with other cryptocurrencies.
Once recorded, information and data can’t be erased. Blockchain technology will ensure real-time availability, record-keeping consistency, and transparency across industries. The fungibility, security, and privacy of blockchain technology make cryptocurrencies a vehicle for those looking to generate wealth.
Blockchain in Business
Blockchain technology in the business world will simplify verifying transactions, speed up most transactions, and make supply chains more efficient.
Blockchain technology will coordinate transactions between suppliers, shippers, buyers, customs, and border enforcement. Using smart containers, a wholesaler would be notified and the items ordered. The wholesaler would inform the trucking company to pick up and deliver the products.
The retailer would then have a record in the blockchain of each step in the process, and payment would be made by blockchain, with all transactions verified in the blockchain.
Blockchain and the Insurance Industry
Blockchain technology can benefit the insurance industry by ensuring real-time availability and record-keeping consistency. The technology will make the industry more efficient and reduce operations costs.
As things stand, there is no such thing as a bitcoin insurance policy. Bitcoin is a technology that can be used to make the selling and servicing of insurance policies very efficient. It will make fraud easier to detect, decrease administration costs, and make it much easier and faster to file and follow up on claims.
Blockchain and Security
When discussing blockchain technology and the insurance industry, one of the most significant developments for improving customer satisfaction is using blockchain in data security, especially personal data.
Customers are afraid of losing control of personal information when handed over to any company. Customer-controlled blockchain can be used for identity verification and the security of medical records and health data.
The company would not store personal data on the blockchain. It could remain on the user’s personal device. Only verification through a medical facility or doctor is stored on the blockchain.
In a situation like this, benefits to the system are from the ability to scale the technology and have enough companies and individuals participating in the reuse of the verified data.
Cryptocurrency as Investment
Investing in cryptocurrency is very speculative. The crypto market is volatile and has an uncertain future. If you’re interested in investing in cryptocurrency, read and study as much as you can about the technology.
It’s essential to have some strategy around investing in cryptocurrencies and managing your risk. Beginning traders in crypto will want to consider the transaction fees, the types of cryptocurrencies available, any special offerings like resources for education, and whether it aligns with your interests and goals.
TradeStation, Coinbase, eToro, and Gemini offer an easy, accessible, and secure platform to own and transact Bitcoin. It’s best to take a balanced approach toward investing in cryptocurrencies.
Alexandra Arcand writes and researches for the life insurance comparison site, ExpertInsuranceReviews.com. She is an insurance and finance expert who enjoys sharing investment opportunities with others.
Post You May Also Like