In February 2021, Tesla announced that it has bought $1.5 billion worth of bitcoin. The company also said it would start accepting bitcoin as a payment method for its products. CEO Elon Musk has been credited for raising the prices of cryptocurrencies, including bitcoin, through his messages on Twitter. Just then Flocks of investors started to focus on the new concept of a crypto currency.
A term we started to hear about in 2005. In the beginning, no one was paying much attention to crypto currency as a means of investment or that it can also be converted into cash. However, in the following years bitcoin jumped in value from a couple of hundreds to fifty thousand plus USD per one single coin. The unconventional profit drove investors to this new ideal investment, along with its growth as a mode of payment within the dark web.
What is Crypto currency? How different is it from cash? What makes crypto currency an appealing & reliable mode of payment? What is the difference between crypto currency and stocks as an investment? How safe are they? And What is the future of Crypto currency?
Crypto currency is a digital currency, which is an alternative form of payment created using encrypted algorithms for purchasing products and services online. It is concluded with only (Twenty one million in total number of coins) and can’t increase beyond that number. Since it is a block chain, this makes it uncontrollable against external factors.
So in essence it is supposed to play the role of cash online. However it is intangible, how do you calculate its value? Well it is simple, by how many people want to have it, so it literally supply and demand that determines its value and therefore it is not an investment in itself but rather owning it to exchange goods and services is actually what gives it its value. On the contrary, the cash base is related to the size of the economy and the dynamics of supply and demand, yet is regulated by the Central bank. Cash can be controlled to increase or decrease its availability within the market via direct and indirect Government control and economy forces.
What makes crypto currency an appealing mode of payment is mainly the fact that as the world is transforming into intangibility and virtuality with the growth of annual sales online, the crypto currency marked a leap towards the concept of a proper online currency to be in use. Another factor that drove its growth is the realisation of wealth that goes beyond the stock markets returns and regulations, the confidence given by companies such as Tesla when they announced buying crypto, or countries announcing studying its application as an official mode of payment, this type of news gave credibility to crypto trading. On the other hand, stock trading is related to companies performance and ability to convert stocks into cash easily, yet, the actual problem with a crypto currency is that there is no real performance benchmark. It’s rather pure gambling rather than solid financial estimation.
Over the recent months a couple of Crypto currency makers bankrupted and billions evaporated into thin air, causing a havoc of inquiries and investigations into the sharp downfall of Crypto currency.
Where did that money end up? Well the brokers sure made money. Where did the money of the buyers go? It is a blocked chain right. Then the issuer of the virtual coins must have taken the money. Can you legally sue them? I believe you can’t. It is not recognized by any financial institution or government regulations. It is under the term (buy at your own risk). Accordingly, It’s more of a gamble than actual market supply and demand factors and as long as money is not regulated by Governments and Central Banks it will remain an insecure type of trading that will ultimately need the security and government regulation before any person can ever proceed into cryptocurrency trading.
