We’ll start this article with a short description of how bitcoin and other cryptocurrencies are bought by investors. They are either using bitcoin exchanges due to certain advantages or buy bitcoin in the internet exchangers. Your initial currency will have a direct impact on how you would go about purchasing bitcoin. You may buy bitcoin via wire transfer or buy it for regular digital money. By the way, on EXMO you may deposit right from the debit card.
Aside from the technical aspects that we’ve reviewed in the previous parts, when working with cryptocurrencies, you should also consider the financial nuances: depending on whether you’d like to use cryptocurrencies as an investment or payment instrument, you should pay attention to various deciding factors.
Advantages of using cryptocurrencies as a payment instrument
Users give preference to using cryptocurrencies as a payment instrument due to the following qualities:
1) Commissions are low or close to zero. Today this is not much applicable to bitcoin unless we’re talking about sending the amounts equal to hundreds and thousands of dollars. Though, other cryptocurrencies ensure minimum spendings on commissions. Sending any amount in DOGE for example will cost you an equivalent of $0,01 at most. On the other hand, the liquidity of bitcoin is unquestionably higher, so it can be more convenient to send huge transactions in bitcoin and lesser transactions (microtransactions) in other cryptocurrencies.
2) Absence of over-regulation, nor banking or governmental control. You may send your cryptocurrencies to anyone you want, anywhere you want with no limit for upper amount margin. The same goes for the lower margin, however small transfers may require relatively high commissions in comparison to the transferred sum. Transborder transfers can be especially cost-effective when using cryptocurrencies.
3) Transferring speed. Transfer between 2 banking accounts can take 2 or 3 days plus weekends and holidays, with debit card to debit card transfer not always available. Cryptocurrency transaction, on the other, hand is done within 5-10 minutes when supplied with sufficient commission or, worst case, in under one hour. We’ve noted above that transaction can be considered done when miners find the upcoming block and include your transaction register your transaction inside it. This means that the average time for transfer is comparable to the average time for new block search: for bitcoin it takes about 10 minutes, 1 minute with DOGE and around a quarter of minute with Ethereum.
4) High level of security and protection of payments delivered by a special cryptographic algorithm.
5) Anonymity or pseudo-anonymity of payments. Despite the fact that the blockchain of any cryptocurrency is sufficiently public and everybody can see all transactions done by everybody, the absence of user address confirmation makes cryptocurrency operations either pseudo-anonymous or, as it is the case with DASH, completely untraceable (anonymous).
6) Ready to start after an easy anonymous registration. A relatively small amount of data you need to enter to sign up. Even email can sometimes be optional. Especially fortunate for those avoiding to put their personal information online, and also being younger than 18.
This is not only relevant for local cryptocurrency wallets but also for wallets within certain cryptocurrency exchanges, such as EXMO, where you only need to enter your email to register.
7) Irrevocability of transactions. This is especially important for people doing business, who are frequently facing the problem of fraudulent return of payment, when working with traditional payment systems.
It should also be noted that the reduction of banking service expenses will make the goods cheaper for vendors willing to accept payments in bitcoin. Besides the entrepreneurs will be able to sell the goods and services to citizens in relatively remote countries that have transborder related difficulties when accepting the payments via a banking accounts or debit cards.
Cryptocurrencies as an investment asset
Evaluation of investment potential in specific cryptocurrencies is done based on how dynamic their rates are, core technology potential, professionalism of the developing team and financial capacities of people promoting these cryptocurrencies and investing into their development. The total sum of these factors forms a certain amount of capitalization and various perspectives to increase it. More details on cryptocurrency investment can be found here
. It should be briefly noted that getting to know the investment potential of a specific cryptocurrency is done by analyzing its rates for the previous months or even years, as well as viewing the pros and cons of its technology. Mind that the low capitalization of the especially new cryptocurrencies that exist for only a few months, makes it easy for speculators to “swing” their rates. Pushing them away from the true market value determined by the balance of offer and demand. For this reason investing into the especially new and too rapidly growing cryptocurrencies is quite risky.
Acquaintance with a cryptocurrency should be done in a combined fashion, considering the main aspects of its functioning and dynamic of its rates, while paying special attention to ensuring the safe storage and transfer of your crypto-assets.
If it’s hard for you to combine all these nuances, then you should determine how do you intend to approach working with cryptocurrencies and develop your knowledge in the given direction. For instance, would you like to become an actual investor or do you only need to transfer the money by their means. In any case, cryptocurrencies, especially when chosen well, can be of use to anyone, considering the hard financial conditions of the world we live in.
This has been the final part of our guide on how to get into cryptocurrencies. Please check the previous parts on technicalities
, transfer of cryptocurrency
and how to ensure the safety of your crypto-assets
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Additional materials that may help you:
Cryptocurrency: Where to start? Pt.1 – Introduction
Cryptocurrency: Where to start? Pt.2 Technical side of the coin
Cryptocurrency: Where to start? Pt.3. Transferring Cryptocurrency
Cryptocurrency: Where to start? Pt.4 How to Ensure the Safety of Your Crypto Assets
What are the pros and cons of investing into cryptocurrency
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