What Really is Cryptocurrency Investment About ?

You would probably think investing in cryptocurrencies is just about buying coins and holding them. Then when the value increases you sell for cash. Well that’s basically how it works. But that’s not just it. And if you’ve not got the right knowledge about what it is you’re really investing in or what’s behind what you invest in, then You’ll probably be wasting money.

IT'S MORE THAN JUST BUYING AND HOLDING ANY COIN YOU LIKE OR FEEL WOULD INCREASE IN VALUE

INVESTING IN BITCOIN: Investing in Bitcoin is simple and straight forward compared to investing in other cryptocurrencies (Altcoins). We all know what bitcoin is, giving it’s popularity and purpose. Bitcoin is made specifically for payments and transactions. It has no company behind it, no one knows who invented it except the name Satoshi Nakhamoto. Bitcoin is Unique. and it can’t be stopped. So if you’ll investing in Bitcoin, it’s just a straight forward process, Buying them, keeping them in your wallet and selling them when the price increase in value. You wouldn’t need to carry out much research on what it’s about, or the team behind it. Or where Bitcoin headquarter is located.

INVESTING IN OTHER CRYPTOCURRENCIES: Investing in other cyptocurrencies is quit different. Let’s take Microsoft company or Apple for example, if you wan to invest in these companies, you buy their shares at a certain price, expecting the price to increase in value. the reason you would consider investing in Microsoft is because you know it’s a good company, same with apple. They’re into software and hardware production, (Computers). You know these companies is likely to have a bright future. The truth is you don’t know actually, nobody knows the future. But looking at the possibilities, There’s a 90% chance that both Microsoft and Apple companies would do well in future and the value of their shares would also increase in value.

The price of the shares is dependent on the performance of the company. If the company does well, then it’s going to affect the price of their shares positively and that means profit for you. This is exactly the same way it works when it comes to investing in cryptocurrencies.

Every other Cryptocurrency out there has a purpose and there’s a company of platform behind it. and these cryptocurrencies are like the shares of the company. The difference is that in the cryptocurrency space, instead of the normal regular shares you get sitting in your account doing nothing, The cryptocurrency you get as shares from these companies can be used to carryout transactions withing the operations of the company.

One thing we know for sure is that every company has a purpose, a project behind the company. It could be a payment company, Solar energy company, Medical company, Hotel booking and reservation company, anything you can think of. If the Project of the company is built based on the blockchain technology, then they produce their Cryptocurrency as their shares which act as a source of value for the company or project.

WHY THE CRYPTOCURRENCY? One question you would probably ask is why the cryptocurrency. Most of these companies starting up these new projects using the blockchain technology are start up companies and they require huge start up capital to push their project or idea forward. The next thing they need to do is rais money for their project and they do this through crowdfunding. I’ll explain further below.

CROWDFUNDING/ICO: Crowdfunding is simply and process where by these start up companies come to the public with their idea and project and ask for contributions because they can’t afford the capital to start up the project. So if you like their idea or project, You invest with them. and what do you get in return for your investment? Their Cryptocurrency. You would only contribute to the project because you believe the project has a potential to do well in future and as a result, would cause an increase in the value of their cryptocurrency. The one you got for your contribution. In the crypto space, crowdfunding is called ICO (Initial Coin Offering).