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Will Cryptocurrency Replace Stocks as a Primary Investing Option?

Have you ever had trouble focusing at work because of market volatility? Is it a challenge for you to sleep at night worrying about the ups and downs of the stock market? Honestly, at times it can be scary. Our investments are at stake and we don’t want to end up on the losing side with those. 

What if I there was a better way to manage and handle your investments while not having to worry about hard cash? Is that possible? Today’s contributor, Ana Farr, Community Manager at ecommerce-platforms.com and Unblock.net believes so. She is here to explain why, in her opinion, it would be better to invest using crytpocurrency rather than stocks.

A Brief History of Cryptocurrency

It began on October 31, 2008, when Satoshi Nakamoto introduced a peer-to-peer electronic cash system to the world known as Bitcoin. Bitcoin was the first ever cryptocurrency to be created. A year later, In 2009, Satoshi sent Hal Finney a computer program marking the 1st time that a Bitcoin transaction occurred.

The first item ever bought was a pizza in 2010 using 10,000 coins. The value of those 10,000 coins would be worth millions. That’s one expensive pizza!

In 2011, rival cryptocurrencies came into existance such as Litecoin and Swiftcoin. But acceptance of the currency was not widespread. In 2013, Thailand banned Bitcoin and Germany’s Ministry of Finance refused to accept Bitcoin as a official currency. Additionally, Peoples Bank of China prohibited all financial institutions from using Bitcoin.

In the West, the first Bitcoin ATM was launched in Vancouver, Canada. And we saw Microsoft let users buy games with the currency in the year 2014. The total number of Bitcoin ATMs increased from 500 to 900 by the end of 2016.

Acceptance of the currency continued to grow around the world. Uber in Argentina began to accept Bitcoin payments along with Swiss national railway and Steam, a software website. In 2017, Japan passed the law to accept Bitcoin as the legal payment.

In 2018, Samsung confirmed that they are making chips to help mine coins. And multiple European governments have joined forces to co-operate on cryptocurrency regulation and may also continue to launch innovative partnerships with high-street names.

ICO’S and IPO’s

With that history behind us, we can now turn to some details about cryptocurrency that can be confusing. In particular, what does ICO and IPO mean in relation to cryoptocurrency?

An ICO (Initial Currency Offering) happens when potential investors are given a chance to purchase a part of altcoins (the alternative cryptocurrencies launched after Bitcoin) total supply before the mining process to create the digital coins begins. Most investors do this in hopes of seeing the price per coin increase in the near future. You can buy tokens from any part of the world as long as you have an Internet connection. In this case, the coins don’t guarantee ownership of the project. 

An IPO (Initial Public Offering) takes place when a cryptocurrency company hopes to raise additional funds for its operations. Investors receive a share in the company and earn interest pain in recurring dividends. For an IPO, you will need the asisstance of a broker and maybe a lawyer, depending on how deeply you are involved. Investing at this early stage gives you the chance to sell the stock when the value rises.

Advantages of Cryptocurrency

People believe in cryptocurrency for various reasons. You don’t have to deal with banks, there are no worries when it comes to paying taxes and  you have a centralized peer-to-peer electronic cash system to rely on.

Additionally, we see the following benefits:

Lesser Chance of Fraud and Identity Theft

How can cryptocurrency reduce the chances of fraud?

You don’t have to worry about someone stealing your money as your identity is nothing but a bunch of words and numbers. So no one is sure as to who the money is coming from and to whom it’s being sent to. That’s one of the best things about the crypto universe

Additionally, there is a push system that forces you to give the exact amount for each transaction. The merchant is not able to get access to your line of credit, thus reducing the chances of identity theft.

Related Content: How to Protect Your Child from Identity Theft

Immediate Settlement

Generally, on a big business decision, you would require a third party (lawyers, notary) to draw up and witness the settlement. There are also issues like late payments and fees payments. But, the crypto universe, you won’t have to worry about things like that. That’s because the cryptocurrency blockchain is like a larger property rights base. You can remove or add third parties to be part of the approval and refer external facts to be able to come up with a settlement.

Lower Fees

Cryptocurrencies do not charge any transaction fees as miners are compensated by the network. Even though there is no transaction fee, people end up using third parties such as Coinbase to be able to maintain their online wallet, much in the same way fiat user use PayPal. Coinbase provides an online platform for users to be able to exchange cryptocurrency without any charges.

Decentralization

The entire concept of cryptocurrency is to remove the need for intermediaries such as banks. When banks don’t have any control over the monetary exchange, it makes things easier for cryptocurrency users when it comes to taxes and exchange rates. Taxes and exchange rates end up becoming free, as no third party needs to be paid..

Additionally, there are not transaction charges, exchange rates, interest rates or charges for any country. This makes it easier to use cryptocurrecy at international levels. This ends up saving money and time for businesses who regularly invest and transfer money from one country to the next.

Individual Ownership

With a banking or credit card system, you end up giving authority over your funds to a third party who monitors your transactions. You will have to go through them to get what you need. Additionally, should you breach their terms and conditions of service, it may be challenging to get your money back.

If you invest in cryptocurrency, you don’t have to worry about that. You can take care of your own finances without having to jump through hoops.

Advantages of Cryptocurrency Over Stocks

There is no doubt you can make money in the stock market. It is a key driver for growth of money. If done well, a person can become very wealthy.

Related Content: The Ultimate Beginner’s  Guide to Investing Money the Right Way

But there are risks to the stock market, risks that investing in cryptocurrency addresses. Here are several.

Confusion

There are so many investing vehicles to choose from in the stock market it can be overwhelming. Cryptocurrency gives you something easy to understand.

Losses Due to Extreme Volatility

If you’re an investor then all that you have to look at – the events of 2008. The market dropped really low in a matter of few hours. These dips could end up taking you years to recover from. Many people did get their investments back but not all survived that market crash. It just takes time for markets to recover – time that you may not have. 

Some companies went out of business. As a traditional stock holder, you would be the last one to get paid. Preferred stockholders and bondholder always get paid first.

Editor’s Questions for Discussion: Would you ever invest in cryptocurrency? Why or why not? Do you agree that they are a better investment than the stock market? 

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