Cryptocurrency has been around for some time now but has really only been publicly well known for about the last ten years. During that time many questions about what cryptocurrency is and can be used for have arisen, with answers being varied.
Of course, the big answer is that crypto is an electronic currency that can be used for online transactions. But the main way to get cryptocurrency is through an exchange like rubix exchange – ripple being one of the currencies available. This means exchanging one currency, often United States dollars, for the cryptocurrency of your choice.
Whenever currencies are exchanged, exchange rates have to be considered, and variable exchange rates always lead to speculation. Many of the news surrounding cryptocurrency in recent years has focused on large swings in the value of these currencies compared to the US dollar. This is where crypto can become viewed as an investment rather than a currency.
The value of a cryptocurrency depends on many things, with one of the biggest factors being demand relative to the supply of that specific coin. Of course, this sounds obvious, but these values change with much more volatility than government-backed currencies, or investments like stocks. This is both the draw and the drawback.
When news of big gains in cryptocurrency markets goes public, the prices react quickly. And the changes in price can be significant. Once prices start to rise, interest grows, and more people buy, trying to be in on the big gains. Unfortunately, the losses can be just as big, and just as fast.
One of the drawbacks of cryptocurrencies right now is that their volatility isn’t just tied directly to traditional market factors. They can be affected by any number of celebrity and business decisions that wouldn’t change the value of other investments or government-backed currencies. Wars and employment rates can have long-term effects on currencies and stocks, but a celebrity tweet can raise or drop a crypto’s value in a few minutes. Some see this volatility as a challenge, but the losses are real. Stability isn’t guaranteed, and it will take a lot of increased usage of these currencies as just that – currency – to bring more stability to the space.
That being said, the intent of many cryptocurrencies is good. Making an online medium for safe, secure and private transactions is a noble goal. Letting people interact safely without the threat of bad actors can only improve commerce, and the innovation in the cryptocurrency space has been nothing short of remarkable. Private citizens using their brains to try to better the world for each other is an amazing goal, and real progress is being made.
While the risks of using cryptocurrency as an investment are real, there are real-world benefits to creating value in new currencies in this way. Winners and losers are being chosen, and that process is never pretty. But the results in the long run may end up giving us a way to interact with each other that no one imagined a few decades ago.
