What Makes Cryptocurrency a Good Investment
Which cryptocurrencies are worth investing in
Excursus: What are cryptocurrencies?
Basically, cryptocurrencies are digital means of payment. As a rule, they are independent of states and are therefore widely distributed. The title crypto currency is misleading because it is not a currency in the classic sense. It is not physically available but can still be used to pay for purchases. The first cryptocurrencies hit the market in 2009. Over 4,500 crypto currencies are now traded. Cryptocurrencies are de facto not subject to any control, so those involved have to make sure that all rules are adhered to.
The classic: Bitcoins
Bitcoin was the first publicly available cryptocurrency. According to statistics, sales increased to 17.91 million bitcoins in circulation in recent years. Bitcoins' market value is around $ 165,181 million. Anyone who wants to invest in this currency, i.e. buy bitcoins, can now easily do this via PayPal. There are relevant online portals which on the one hand provide information about current market developments and on the other hand offer purchase options. So it is now relatively easy to buy bitcoins. It is just as easy to spend bitcoins again: There are now over 6000 places that accept bitcoins as a means of payment. This includes shops as well as hotels and restaurants. In Germany there are over 100 places where customers can pay with Bitcoins. The currency is establishing itself more and more as an actual means of payment that is not subject to any government or bank supervision.
Bitcoins are especially interesting for people who want to deal with their cryptocurrency on a daily basis. Bitcoins can now be used almost like a normal currency and offer users many advantages. The independence from banks ensures that bills can be paid quickly, without detours and stress-free.
The second: ether
After Bitcoin, Ether, abbreviated to ETH, is the second largest cryptocurrency in the world. Their market capitalization is around $ 19,826 million. Ether will be launched in 2015 as the internal currency of the "Ethereum" system. Ether is the pioneer when it comes to “smart contracts”. Contractually stipulated payments can be made completely automatically. This principle is currently being tested in many industries, such as some airlines.
In practice, a passenger whose flight has been canceled would no longer have to file a claim for damages. Instead, the customer automatically receives a pre-determined payout when the failure is registered in the database. This should relieve the airlines and insurance companies. Ehter is therefore not designed for daily payment transactions like Bitcoins, but is intended to relieve companies and customers alike.
For climate protection: green cryptocurrencies
Although cryptocurrencies work purely digitally, a relatively large amount of energy must be used to produce them. The computational effort required to generate the bitcoins is extremely high. Not least because of this, it is called "Bitcoin mining", which is comparable to mining gold. Each Bitcoin transaction requires around 300 kilowatt hours of electricity. Those who know this are more likely to lean towards more sustainable alternatives. That is why there are more and more attempts to launch green cryptocurrencies.
A good example of green currencies are peercoins. Here, the generation of new coins does not depend on electricity, but on all participants. Unfortunately, green cryptocurrencies have not yet reached the masses of users as much as classic crypto funds, so that the spread is not as advanced. But if you value sustainability, then green bitcoins are the right choice.
The banking favorite: Ripple
So far, payments between individual financial institutions have been processed using the so-called Swift system. Swift stands for "Society for Worldwide Interbank Financial Telecommunication". Consumers are familiar with the abbreviations used for transfer forms from their bank. In the future, the crypto currency Ripple will replace this standard. Various international banks are already working with the new currency, which can carry out around 1500 transactions within a second. Each payment process takes around four seconds. The Spanish Santander bank is already processing internal transactions via Ripple.
Ripple is interesting for investors who do not want to use their currency for actual payment transactions, but prefer to invest in visions with a promising future.
The dangers of cryptocurrencies
Of course, the use of cryptocurrencies doesn't just offer advantages. On the one hand, Bitcoins and Co. are not physically tangible. That makes them unreal for many people. Laypeople in particular with no experience in IT do not understand exactly how a crypto currency works and must first read into this type of payment method over the long term. Not everyone has the leisure to do so.
Second, the anonymity of the user can lead to illegal use of the payment method. Bitcoins have been used in the past for money laundering, ransom extortion and as a means of payment for illegal goods. Whether drugs, weapons or illegal pornography - crypto money is not flawless. In the so-called Darknet, it should even be possible to pay contract killers with crypto currencies. That is why many people still have a bad feeling about buying Bitcoins or other crypto currencies. However, one thing is clear: Those who do not actively get involved in dubious business will be able to pay legally with Bitcoins and Co. in the future as well.
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