Bitcoin, Ethereum and what you need to know about cryptocurrency
You’ve probably heard a lot about cryptocurrency, Bitcoin, and everything in between. Maybe you feel confident and have a complete understanding of what exactly those words mean. But if you’re like most of us and have a vague idea of what this trend is all about, we have you covered. Read on to learn the cryptocurrency basics so you can become an expert, too.
What is cryptocurrency?
Think back to your favorite arcade as a kid. You played game after game, earned tickets or coins, and exchanged them for a prize of your choice at the end of the day. Cryptocurrency works in a very similar way. Essentially, cryptocurrency is a form of payment that is used online in exchange for goods or services. You purchase cryptocurrency with real currency, i.e. your favorite credit card.
How many kinds of cryptocurrency are there?
There are more than 10,000 forms of cryptocurrency. This is because many companies often use their own cryptocurrency, called tokens, that their customers only use for the company that issues them. One of the most popular types of cryptocurrency is Bitcoin, which has been around since 2009. You may have also heard of Ethereum, which proves the second-most popular type of cryptocurrency currently available, called Ether.
You may have stayed out of the cryptocurrency trend, and we can’t blame you. However, it’s probably a good idea to have a basic understanding of what cryptocurrency is and how it may affect you, especially as more and more businesses embrace the digital age and offer cryptocurrency as a form of payment.
Is cryptocurrency better than paying with my credit card?
In some ways, cryptocurrency seems redundant—we already have a way to pay online for goods or services by using a credit card, PayPal, or other money-transacting service like Zelle and Venmo. But the appeal to things like Bitcoin is that, due to the type of security it employs, defrauding or cheating someone is very difficult. This has made cryptocurrency a popular choice for many people who are concerned about having their personal and financial information stolen.
Should I invest in cryptocurrency?
This question has been a popular one for many people as they consider whether they should try to put Bitcoin and other cryptocurrency to work for them and grow their finances. While there are a lot of considerations to be made about this decision, many financial experts warn people to tread carefully before making an investment in cryptocurrency.
Citing concerns like the instability of cryptocurrency, now might not be the time to invest a lot of your money. In 2021 alone, the value of cryptocurrency skyrocketed, only to plummet nearly 50% just a few months later. But if you are interested in learning more about investing to see if it’s a good choice for you, consult a financial advisor before you take any steps on your own.
How do I get cryptocurrency?
You can purchase cryptocurrency through a number of online options. Coinbase is a particularly popular website that allows you to create an online wallet that facilitates the purchasing and trading of cryptocurrency. Be sure to note that some companies require you to purchase their cryptocurrency with other cryptocurrency, so if you are going forward with cryptocurrency, you may want to remember to keep a little extra on hand (or online, in this case).
This seems shady—is it legal?
If you live in the United States, cryptocurrency is 100% legal. But you should know that it’s up to each individual country to decide whether they will allow cryptocurrency to be used as a way to purchase items or services. While cryptocurrency offers extra layers of security for your financial information, there are still plenty of scammers who use things like Bitcoin to defraud users. Even if your country allows cryptocurrency to be used, you should still be aware of who you are buying from and where your real currency is going.
What are the drawbacks?
While cryptocurrency allows you to ensure your personal and financial information is secure, there are some drawbacks. Unlike your credit union or bank, cryptocurrency is not FDIC insured. When a financial institution is FDIC insured, this means that in the unlikely event of a bank failure, your money is protected. With cryptocurrency, you don’t have that guaranteed protection. And, as technology evolves, cryptocurrency can be subject to cybersecurity breaches and fall into the hands of hackers. Cryptocurrency is also managed online, and you may not necessarily know who you’re speaking to—or where they’re located. While that may appeal to some, others may want to know who exactly is handling their finances. With Georgia’s Own, you’ll have peace of mind knowing that we’re safe, trustworthy, and FDIC insured.
When it comes cryptocurrency, the best way to make your decision is stay informed and understand the pros and cons involved. Speak with your personal financial advisor to learn how you can diversify your portfolio while working with your preferred financial institution, get your Google on, and spend some time learning what cryptocurrency can do for you.