Is Cryptocurrency The Future of Money?
We are constantly looking for new ways of making money. As we move towards a cashless society, we may wonder if cryptocurrency is the future of money. Trading with cryptocurrency can be a lucrative source of passive income. As with every form of investment, there is risk involved. Understanding your risk tolerance using this article might help you determine if cryptocurrency is suitable for you.
So what exactly is cryptocurrency and why do we want it? For starters, let’s check out this video which gives a great summary.
A Quick Dive Into Cryptocurrency
In the physical world, we have many different currencies like USD, AUD and SGD etc. One can earn through exchange rate movements. For example, if today has 1 EURO = USD 1.19 and tomorrow’s 1 EURO = USD1.2, I could have earned money by buying EURO today and selling it tomorrow.
Cryptocurrencies are similar, except that they exist in a digital form. As we do not have any physical currency to hold, the individual ownership of such money is stored online in a computerised database. The crypto market is one that never closes. It operates 24/7 unlike the individual countries’ stock market.
Cryptocurrency appeals especially to individuals who like to take risks. They are popular given the large fluctuations in their value. Typically, individuals look to trade (buy and sell). They benefit from the exchange rate difference between the specific cryptocurrency and their main physical currency (SGD/ USD / AUD etc). As these rates swing, this becomes a quick way to earn huge amounts of money.
Cryptocurrencies have been gaining popularity exponentially. Big banks like Citibank are even possibly providing crypto-related services in the future! With globalisation, it’s common now for us to keep different physical currencies (USD/SGD/AUD etc). Likewise, even for the non-traders in us, we may eventually consider owning some cryptocurrency as another form of money.
To buy another physical currency, we go to the money-changer or bank for the exchange. We then keep the money with us perhaps in our travel wallet.
For cryptocurrencies, this is slightly different. When we choose which platform to use, this platform acts as both our ‘money-changer’ and ‘travel wallet’.
It is thus important to decide which platform to use. This varies by country so it’s worthwhile to do a Google Search.
Here’s a quick summary of the more popular platforms in Australia/ Singapore with some consideration factors for comparison.
The Future with Cryptocurrency
With its increasing popularity and adoption, owning some cryptocurrency might be beneficial in the near future. We need not necessarily trade but can hold them as a form of money for digital payment.
As a word of precaution, currencies can vary in value. Cryptocurrency is the same. Only hold what you can afford to lose and not beyond your own financial capacity. All the best to those planning to embark on your very own crypto adventure from here on!