Cryptocurrency was the buzz word for much of 2017 and it seems 2018 has many of us even more captivated. Nearly everywhere you go or look you can be sure that someone is talking about or making reference to cryptocurrency.
What exactly is Cryptocurrency?
A cryptocurrency is a digital or virtual currency designed to work as a medium of exchange. It uses cryptography to secure and verify transactions, as well as to control the creation of new units of a particular cryptocurrency. You also might hear about the Blockchain. This is essentially a digitised and decentralised ledger of all cryptocurrency transactions.
The cryptocurrency market has been through the mincer to start off the year. Some of the coins losing 40-50% of their value or more. Bitcoin peaked at around $25,000 AUD late last year and currently sits at just below $10,000 AUD. Whereas at the start of 2017 it was valued at less than $1,000 USD.
Given the huge drop in recent times, is there a need for concern?
If you follow the trends, over the last few years there has been a market downturn mid January, with the overall market finishing substantially higher than where it started.
Thinking of investing?
Like with all investing you need to do your research before diving in. You also need to make sure that you are invested in line with your specified risk profile. You can invest in shares, cash, property and alternative assets; which is where Cryptocurrency would fall. Given the high risk and volatility involved, it would be recommended that the percentage of your total investment portfolio is limited, unless you’re willing to risk everything you have.
It’s also important to find out any tax implications before investing. As like with any money making schemes, the ATO want to ensure that they are receiving their fair share.
The future of Cryptocurrency
At present, Venezuela are looking to utilise a cryptocurrency for their national currency, as their economy is struggling at the moment. This shows that there could be a real future in Cryptocurrency.