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Cryptocurrency: a risky investment?

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Cryptocurrency: a risky investment?

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With many young people today who dream of riches and new cryptocurrencies becoming more valuable, it just might be possible, if they are lucky enough.

The problem is, those who try to invest into a digital currency might end up either earning close to around either $10,000 or one tenth of a penny because the value of the currencies changes unexpectedly.

A cryptocurrency is a digital currency where encryption techniques regulate the generation of units of currency and verify the transfer of funds operating independently from a central bank according to the Oxford Dictionary. It requires a wifi source and special software to solve math problems/issues to receive a certain number of Bitcoins in exchange.

Mining is the mechanism used to introduce Bitcoins into the system. Miners, are paid any transaction fees as well as a “subsidy” of newly created coins.

Eighth grader Tyler Buck, a cryptocurrency investor and Bitcoin miner, explains how easy it was for him to benefit from the digital money.

“It’s not hard to get USD from the Bitcoin because all you need to do is transfer it into something like Paypal or now even transfer it into your personal bank account and directly onto a credit card,” Buck said. “It’s easy to get the money from the coin, it’s just hard to get the actual Bitcoins because of how many people are on it trying to mine at once,” he said. “Last year me and my friend had bought a miner. It was just a USB thing that you plugged in and whenever you use the internet on your computer it would just be mining constantly and would immediately be put into my friend’s account, which we would split the earnings of it.”

The rewards of cryptocurrencies like Bitcoin have been taken advantage of by people like Buck, who understand how vast and expanded the system it is.

Erik Finman, an ordinary teenager who invested in Bitcoin in 2011, currently owns over 400 coins which approximately amounts out to around $4.4 million at the rate of $11,182 a coin.

Cryptocurrency and ICO markets have grown rapidly in markets that are local, national and international according to the U.S. Securities and Exchange Commission.

With that in mind though, other digital currency forms like Dogecoin and Namecoin who people consider “joke money,” may actually be profitable in the near future. The creator of Dogecoin made the coin so that it gives a wider demographic than just Bitcoin. Dogecoin is always running updates and improving its blockchain system, completely independently of Bitcoin, to implement new features according to the architect behind the coin Ross Nicoll.

As far as getting scammed goes, usually people who have a lot of coins are abusing the use of it. A survey taken in 2015 by MarketsInsider shows Bitcoin users tend to be overwhelmingly white and male, but of varying incomes. The survey suggested that people with the most bitcoins are more likely to be using it for illegal purposes. According to Jason Bloomberg, and IT industry analyst, there are four primary areas of criminal activity lend themselves to cryptocurrency: tax evasion, money laundering, contraband transactions and extortion.

However, those who use a digital currency can make transactions completely legally. According to author and entrepreneur James Altucher, “If there’s a bitcoin transaction, enough miners need to approve that the transaction is valid. So even if a few miners are not trustworthy, the bulk of them will be and we can trust that the transaction between me and the other party is legit.”

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Cryptocurrency: a risky investment?