Cryptocurrency has been all the rage lately, and with all the hype, it’s easy to think that everyone is going to get rich off it. But is cryptocurrency really the answer to your financial goals? Is this something you can get in on? Is cryptocurrency worth it? What are your options?
Some of the biggest names in Silicon Valley have poured millions of dollars into cryptocurrency startups. Investors want a piece of the cryptocurrency pie, from the controversial company BitConnect to more established players such as Coinbase. But will cryptocurrency make you rich? It depends on your expectations, as well as the currency you choose.
Bitcoin
The price of Bitcoin has recently hit $20,000, turning a lot of eyes and attention towards it. Bitcoin is valuable for several reasons as it shows that a decentralized currency can potentially work. However, Bitcoin is mostly a speculative resource and thus its value fluctuates rapidly. Its primary use at this point is to be bought and then sold off again when prices have changed.
Bitcoin also requires massive amounts of power to send and validate transactions, which in the age of rising energy costs is a significant concern. If you are considering setting up a mining operation to generate Bitcoin it is important to consider the sheer energy cost.
Ethereum
While cryptocurrencies like Bitcoin and Litecoin have been around for years, Ethereum is a relatively new cryptocurrency that has quickly become popular with investors. Ethereum has more inbuilt features such as contracts and NFTs which allow people to tie other objects of value to the currency, such as art assets. This means it is somewhat less speculative than Bitcoin as the asset can hold real-life utility.
Ethereum is also much more energy-efficient than Bitcoin, which has received criticism for the massive amounts of energy wasted on failed mining attempts. And as Ethereum continues to receive updates, it may become more valuable in the future. However, just like Bitcoin, wealth is obtained by buying low and selling high.
Polkadot
Polkadot is another relatively new cryptocurrency that was created in 2017. It’s another decentralized platform that’s part of a larger effort to create a more distributed internet. You may already be familiar with it because, in January 2018, it became one of the 11 official cryptocurrencies supported by the Chinese government, which naturally increased its value.
Polkadot promises to solve a lot of issues that other cryptocurrencies face. It is a smarter alternative to Bitcoin and Ethereum, but it also offers higher security than other currencies. However, it is in the early stages of development, meaning that any ability to profit from it is essentially a gamble at this point.
