I Don’t Trust Bitcoin, But Should I Ditch Crypto?
The recent rise and rise of the cryptocurrency market followed by a crash has heightened the mistrust and defiance of Main Street, which still equates the entire crypto sphere with bitcoin, despite the growing popularity of NFTs – essentially a line of code blockchain, the platform on which all cryptos are coded, this represents a unique object of its kind.
“Bitcoin is very volatile. It’s very risky,” said Hank Boyd, professor of marketing in the business department at the University of Maryland. He explains that it is for this reason that he has not yet personally invested a penny in the crypto space.
Does Bitcoin represent the crypto space?
For many, when we talk about crypto we are necessarily talking about bitcoin. The two are even interchangeable, so when told about ethereum, the second largest cryptocurrency, they feel like they are being told about the new buzzword or a new fad.
There is more of 16,900 types of cryptocurrencies as of January 17, according to price-tracking website Coinmarketcap. They are known as “altcoins” or alternative coins which are cryptocurrencies other than bitcoin. And as the crypto market capitalization has reached new heights, these alternative coins are eating away at Bitcoin’s market share.
Of the $2 trillion global crypto market cap, Bitcoin’s market share is 39.6% as of January 17, up from around 70% from the same time last year, according to Coinmarketcap. In other words, altcoins currently make up over 60% of the crypto market.
Cryptocurrencies are simply digital currencies that only exist online and operate through peer-to-peer technology. Unlike fiat currencies – issued and guaranteed by a country – they have no paper version and no central bank controls their supply.
However, we can use them to send and receive money, and the potential everyday uses will no doubt multiply in the near future, just as the internet and other revolutionary technologies have.
The network that powers them, known as the blockchain, has great potential, experts say. It could one day become as ubiquitous as the Internet is now, with some even calling it “Web 3”.
Cryptocurrency is the most basic implementation of blockchain.
So what can I do with crypto these days?
Unlike bitcoin, which functions primarily as a payment network and cryptocurrency, blockchain networks such as Ethereum, Cardano, Avalanche, Polkadot, and Solana allow users to build applications that can store personal data and authorize transactions. peer-to-peer financial platforms.
Users also have access to platforms that establish rules for complex financial transactions, such as smart contracts that govern ownership and sales of NFTs, play-to-earn games, distributed storage, and decentralized finance applications ( Challenge),
The last one, DeFi, has big appeal: access to an open, borderless alternative to every financial service imaginable – savings accounts, insurance, loans, trading, etc.
As of December 2019, the DeFi ecosystem had $700 million in digital assets locked away in its financial products. Recently, this number has climbed to $96 billion.
These apps, which cut out the middleman, are fundamental to developing new ways for consumers and businesses to interact and digitally manage operations.
“The cost with which individuals send money using money transfer services is quite high. The alternatives that exist today seem like something that is going to be potentially very disruptive to this space in which (cryptocurrencies) can do it faster, cheaper, and with a similar, if not greater level of security,” said Dan Perlin, managing director of payments, processors and IT services at RBC Capital Markets in Baltimore.
Unbanked people can transfer money to others, even overseas, using their crypto wallets, or make purchases using crypto with participating merchants using apps like BitPay, all without the need to go through traditional financial institutions.
Cryptocurrencies “have low barriers to entry. This opens up tremendous opportunities to help underserved communities in parts of the world,” Remarks California-based venture capital firm Andreessen Horowitz, which has pumped billions into crypto.
“Payment blockchains could open up access to financial services for more than two billion unbanked people worldwide. Mobile wallets allow migrant workers to send money cheaper and easier to their families in another country.”
Should I now bet on crypto?
Many experts say crypto is here to stay, so whether or not to invest in crypto is a personal decision. They advise not to make this decision just because the sector is currently hot. They therefore recommend overcoming the fear of missing out (FOMO) and learning about the sector before embarking on it.
You might want to start learning about the types of altcoins and their uses. According to the evangelists, crypto will continue to shape the way we send, receive, and use money.
According to some experts, cryptocurrencies with strong use cases could mean they have strong fundamentals and could outlast the competition. Not so long ago, there were no apps like Venmo and CashApp to send digital payments using our smartphones.
Know the risks of crypto before buying
Although cryptocurrencies offer undeniable possibilities, they are also subject to many risks that you must take into account, both for investments and for operations.
There is no state protection, and although the blockchain itself has not been hacked, there have been thefts on exchanges
In 2021, there were over 20 hacks where a digital thief stole at least $10 million in digital currencies from a crypto exchange or project, according to at NBC.
Digital wallets that customers use to store cryptocurrencies could also be vulnerable. One of the weak points in security is the set of codes or keys used to access the wallet, explains RBC Capital Markets. If the codes are stolen – by hacking a smartphone on which they are stored, for example – a digital wallet could be emptied.
Crypto trading remains illegal in many countries, and some governments, including the Biden administration, have made clear their determination to regulate the sector, which could impact the prices of some tokens.