Hundreds of millions of people use cryptocurrencies. They create a bitcoin wallet and start investing in it.
Are cryptocurrencies safe?
The crypto data is not managed and issued by a central location. However, it is constantly verified by all participants in the cryptosystem. This branched and interdependent cryptography makes the data virtually unassailable. They cannot be changed in one place subsequently or without consultation. So hackers would have to manipulate all parts of the blockchain network at the same time and simultaneously in order to do anything. Government agencies also have no access. In principle, this makes cryptocurrencies very secure.
On the other hand, there is criticism that money laundering and terrorist financing are being opened up for the reasons given. It is also up for debate that the value of cryptocurrencies is being artificially inflated. That could lead to a bubble that eventually bursts. This in turn would be the opposite of what many investors are hoping for: Not a few are looking for alternative investment opportunities on the world market for fear of currency devaluation, where no “money-hungry bankers” are in control.
“Hot” and “Cold” Crypto Wallets
Coins and tokens, the units of cryptocurrencies, are stored in so-called wallets. There are “hot wallets” in the form of apps on internet-enabled devices. Although these are protected by a long password, they can theoretically be hacked because of their connection to the web. In contrast to cold wallets, here the coins or their shares are transferred to an external data medium. In both cases, do not lose the password for your “crypto account”.
Investing in cryptocurrencies: Is it a good idea?
Although blockchain technology makes transactions extraordinarily secure, like all currencies and means of payment, cryptocurrencies are based on little more than a system of trust.
After the big hype and the enormous price gains, most cryptocurrencies have also gone down again. And because of these high fluctuations alone, many economists consider Bitcoins and others to be a crazy idea. You hardly see a reliable means of payment in a currency that can be worth ten percent more today than it was yesterday.
Understanding cryptocurrencies so comprehensively that you really invest strategically instead of just hoping for a lucky find takes a very long time.
