Bitcoin was launched way back in 2009 after the financial crisis. Although this means that cryptocurrencies have been in existence for almost a decade, it is still taking many in business a while to catch on. Shrewd businesspeople will have made a note of the fact that Bitcoin itself rose from $1000 per coin to $10,000 in just over a year. That alone should be reason enough to pay attention to the phenomenon that is cryptocurrencies. But if you have been keeping up with the news, then you will also be aware that the market for cryptocurrencies is extremely volatile. That is perhaps the number one reason why many seasoned investors have been apprehensive when it comes to pitching money into a blockchain project. If you are still unsure about the potential, as well as the risks, involved with cryptocurrencies, here are a few things you should be aware of.
No more intermediaries
One of the main rationales behind Bitcoin and other cryptocurrencies was the eliminate the middleman. That means that most cryptocurrency transactions are not only anonymous but comes with little to no transaction fee attached. Cryptocurrencies have no nationality, so they are not influenced by the same rules and regulations as regular currencies. Another key feature is that all transactions are recorded on the online ledger, which provides users with full transparency.
The price is going up
Despite the volatility of the market in general, cryptocurrencies like Bitcoin are gaining a certain level of legitimacy. This means that people trust it more, and therefore the value of it will continue to go up. the fact that countries like Japan are recognizing cryptocurrencies as a legitimate method of payment also adds to the credibility. More and more tech development companies have now dropped the old pitch of company shares in favor of ICOs – initial coin offerings. This allows potential investors to receive cryptocurrency tokens in return for their investment. Like shares, these tokens usually rise in value as the company progresses.
The risk is still a thing
Despite cryptocurrencies becoming more legitimate and more widely accepted, there is still a certain level of risk involved with investing. One needs only look to the recent crash in December 2017, after Bitcoin hit its all-time high. When you invest in cryptocurrencies, things can quickly change. Governments around the world have now begun to regulate various ICOs, which can both benefit and hurt the various cryptocurrencies. Either the regulations weed out the bad apples, or they stifle the entire industry. As for the ICOs themselves, not all projects are created equal. Many investors end up losing their money because the teams behind the ICOs fail to reach their goals.
Be careful with payments
More and more businesses and charities are now accepting cryptocurrencies as a method of payment. But despite this, it is important to remember that the value of these payments can fluctuate drastically. It would be a shame as a business to accept a cryptocurrency payment, just to discover that the tokens are worthless a week later.