Everyone knows the explosive rise of Bitcoin since its inception in 2008. An asset worth $135 in 2013 rose to over $65,000 in 2021 before falling to $30,462 as of May 23, 2022. Ethereum also had a meteoric rise to the second most valued crypto coin. From January 2021 to January 2022, the cryptocurrency market rose from $767 billion to $2.4 trillion.

In May, the recent market crash (crypto and stocks) has left investors wary of high-risk assets, but there are still many who are urging enthusiasts to buy the dip. So what should you do? Should you take advantage of the low prices, or is it too dangerous to enter the market now?

Are cryptocurrencies safe?
There are several risks involved, and there are many more reasons to believe that blockchain technology is here to stay.

Here is a list of risks associated with crypto coins:
Though cryptocurrencies themselves are hackproof, their exchanges (Crypto exchanges) are more prone to cyberattacks than stock markets. There has been a long history of security breaches and humungous losses incurred by investors who had their assets stolen. Consequently, most exchanges and third-party insurers are offering hack protection.

Another issue is the storage of crypto coins. Prominent exchanges like Coinbase and Binance make buying and selling assets easy and offer in-exchange wallets; most people prefer to keep their investments in personal wallets; simply because they don’t trust exchanges.

Many people store their coins in cold storage (offline hardware wallets). Most crypto-wallets come with a key, without which investors will permanently lose access to their assets. Crypto-enthusiasts often mistrust centralized exchanges because they never provide investors with complete asset control. A government order could freeze your resources on an exchange, or they could go bankrupt, leaving you no means to recover your money.

Investors across the world are also worried about regulations. Global governments are polarised when it comes to crypto coins. China has banned financial & payment institutions from businesses related to cryptocurrency, and South Korea banned Initial Coin Offerings(ICO) in September 2021. Whereas, El Salvador adopted Bitcoin as a legal ledger in 2021. It was a move that jeopardized their economy and President Nayib Bukele’s rule as bitcoin tanked last month.

Many governments are unsure of cryptocurrency taxation and shut down their use as a tender on the darknet and other black markets. In India, for example, cryptocurrencies have a 30% tax, but the ministry still hasn’t declared them legal.

What is worse is that most coins on exchanges are termed ‘crappy coins’ or ‘trash coins,’ and they have no real value. These ‘meme coins’ are merely tokens with no real-world use. Shiba Inu and Elon Musk’s favorite- Dogecoin are examples of crypto tokens popular among crypto day traders and short-term investors. They are bought only to be sold again, quickly at a higher price. And have no long-term vision or technology to back them up. Despite this, Shiba Inu had grown by 1,296,236% since its inception.

Many altcoins (other than Bitcoin and Ethereum) often offer ICOs and exit the market immediately. The cryptocurrency world is wrought with scams, and if you do not read the whitepaper properly and follow the trends, your money could disappear overnight.

One such example is that of altcoins, TerraLuna and TerraUSD. These coins were partly responsible for the recent crypto crash, bringing down the behemoth Bitcoin by 25%. Luna lost 99.9% of its value in the crash of May 2022.

TerraUSD is a stablecoin designed to tether its value to the US dollar to reduce volatility. Do Kwon, the founder of Terra and Luna, is a trash-talking Stanford graduate who pumped up the prices of these coins with his showmanship. Even big investing firms were investing in Luna, which went from little less than a dollar in 2021 to $116 per coin in April 2022. Some big investors pulled out in time, but many lost millions. The twin coins lost a value of over $40 billion. After the crash, even Changpeng Zhao, the CEO of one of the biggest exchanges, Binance tweeted, “poor again.”

Like any other stocks or commodities in the market, no currency or blockchain commodity comes without risks. Sure blockchain is the future, but how sure can you be that the coin you backed is the winning horse?

Finally, blockchain is just one among many competing technologies that can be used to make cryptocurrencies, NFTs, and other digital assets. Holochain, for example, is said to be much quicker, less data-consuming, and more eco-friendly than blockchain. Though it is still in its infancy, if the technology catches up to blockchain, it might become outdated and could be phased out.

Is there a silver lining?
All these dismal tidings and examples of horrible crashes shouldn’t dissuade you. Crypto remains one of the most lucrative commodities globally, and for every hundred ‘meme coins,’ there is an undervalued gem. Prospective coins include Cardano, Solano, Holochain, SingularityNet, etc.

The recent crash is certainly a worry for day traders and short-term investors. But projects with real-world utility should continue to grow. Many celebrity investors have been silent on the recent crash. Hollywood celebs like Matt Damon and Curb Your Enthusiasm star, Larry David publicly endorsed crypto. Matt Damon recently even quoted the Crypto.com catchphrase, “Fortune favors the brave.” However, his post-crash silence has been criticized by the media.

Though the crash has slashed altcoin prices, these technologies are still in development and could make a comeback in the future. Cardano, for example, is one of the biggest cryptocurrencies by market cap and is designed as a scalable blockchain platform for running smart contracts. The project hopes to help develop decentralized finance apps, games, tokens, and the like. Though Cardano’s decentralized exchange (dex), Sundaeswap, failed and lost 83.43% of Cardano’s value from its all-time high, it is still considered a currency with immense potential.

Holochain or HOT is another project gaining traction in a bid to build web 3.0 (a decentralized internet). Despite its recent crash, the project has provided investors with a 100x gain in the last four years. Though dirt cheap at the moment, HOT is expected to hit $1 by 2030.

Crashes and booms are all part of the game. The stock market grew astronomically after the 2008 housing bubble collapse and market crash. And the cryptocurrency markets are no different. There is still room for long-term investors, and the market is expected to bounce back.

Cryptocurrencies are a better alternative to other assets because transparency is a function of blockchain technology. The details of every transaction are encrypted and correct many of the flaws of the traditional financial systems.

They are also deflationary assets. The Federal Reserve has been printing billions of dollars every month to combat a sinking economy. All that printing is causing inflation or stagflation as we speak. However, the only way to make bitcoin is to mine it, which is a very energy-intensive process. There are only 21 million bitcoins, and no government can print more on a wimp.

Also, cryptocurrencies are global assets and are unrestrained by national or regional supply-chain, policy, and market forces. These assets can be held secretly and transferred across borders lightning fast. These attributes give cryptocurrencies an edge over fiat currencies. Finally, cryptocurrencies have the highest potential for high returns, and because the tech is still in development have some unseen long-term prospects.

Many investors think the recent crash is a good thing. Forbes magazine even reported that the price volatility will help create a healthier crypto market and that the crash will help better projects outshine “meme coins.” Experts also pointed out that every previous crash has led to operational improvements in the crypto ecosystem.

Crypto is here to stay. There will be other Bitcoins and Ethereums, and both coins are here to stay. Ethereum co-founder Buterin said he isn’t a billionaire after the recent crypto crash. Dr. Merav Ozair, Professor of Fintech at Rutgers business school, said, “Blockchain technology is the future. There is no escaping that. However, it is difficult to predict which projects will last and which will fail and be forgotten.”

The post Are Cryptocurrencies still worth it? appeared first on International Finance.

In the past few years, cryptocurrency has challenged the currency game in a competent way with bitcoin dominating global cryptocurrency trends. Despite questions around its legitimacy, it appears that bitcoinhas finally gained acceptance in the mainstream. Now, bitcoin, too, has found a successor, called ‘Altcoin’.

The genesis

As the name denotes, the term ‘Altcoin’ is a culmination of two words – ‘alt’, which is an abbreviated version of the words ‘alternative’ and ‘coin’; referring to a currency alternate to another currency. In this case it is the alternate currency to bitcoin.

The new talk of the currency town is Altcoins, the heir and alternative of Bitcoins, both categorised under the cryptocurrency family tree. The birth of altcoins goes back to bitcoins. Although altcoins are claimed to be a better alternative of bitcoins, one of the major reasons for its birth is the fortune that bitcoins earned in the global market in 2017, with a current sky-rocketing value of around nearly US$20,000. At present, one bitcoin costs around US$7,000. Cryptocurrency enthusiasts opine that Altcoins will be wiped out if Bitcoins cease to exist.

Altcoins which are in focus in the current year are Litecoin, Litepay, Litepal, NEO, HIRE, ZCL, BRD, NEO, GAS, NEX and several more. Last year, Altcoins which were in the limelight were Litecoin,TaaS , WeTrust , Matchpool , Zcash , Ethereum , BitSend , PascalCoin , OKcash , Byteball , ZCASH , Augur , Back To Earth.

So, what makes cryptocurrencies so expensive?

The most important reason for cryptocurrencies being priced at bank’s reserve draining rates is that they are assets. But all of them aren’t pricey. Prices of cryptocurrencies boom only when theyattain the market attention. Sam Cole, the Co-Founder and CEO of KnC Group, and Blockchain consultant at Seao, shared his insight on the value of cryptocurrencies: “The vast majority of them aren’t expensive because they have no value. One of the main reasons for the top 10 cryptocurrencies having skyscraping value is that they have earned trust. The trust is demonstrated in the fact that people buying them have a reasonable expectation that the same price or a better one will be available when they come to sell it.”

But when it comes to consistency of holding the market price, there is no guarantee. Be it altcoin or bitcoin, the prices keep fluctuating.

The latest version of Bitcoins is Altcoins- considered an upgraded version of Bitcoins, mainly because they target the shortcomings of the Bitcoins and deliver a better version of them. Litecoin is considered to be identical to bitcoins.

How are Altcoins and Bitcoins different?

Although Altcoins and Bitcoins are categorised under cryptocurrency, both hold their own set of differences Altcoins, like bitcoins, have their own set of blockchains, miners, and wallets – the major zones where the two are distinguished.

An established bitcoin, until now, has been more secure than that newly introduced Altcoins in the market. Brian Hoffman, the CEO of OB1, a company which has been assisting people make free-trade through a Bitcoin-based decentralized peer to peer marketplace, told how the two differs from each other, “To me, altcoins are a way to experiment with different types of technical solutions or economics designs that doesn’t require changing Bitcoin itself. They’re less secure but allow dramatic changes to the way the coin operates without approval from the Bitcoin Core developers.”

A lucrative future or a bumpy one?

Following the changing tides of the payment’s industry, it’s too early to sketch the definite future of Altcoins. As many consider Altcoins to be an upgraded version of Bitcoins, targeting the shortcomings of the Bitcoins and consistently delivering better versions of them might be only points which would help Altcoins overrun Bitcoins. But for the time being, its best to allow the experts to debate and speculate.

Bundling up his years of cryptocurrency experience, Sam shared his final outlook on the prospects that are in hold for Altcoins, “There will always be copies, and people will be pushing their own coin wanting to make it rich. But the few that have great features will be around for a long time.” Putting forth the expectation he has tailored for Altcoins, he further elaborated, “I’m personally looking for a coin with properties that will work for micro machine to machine payments. For example, one that my car will use to pay other cars, allowing me to overtake.”

No matter how many opinions we envision, it will be time to will map the road ahead. So, it’s best to wrap up the article with the words of Brian, “It still remains to be seen if Altcoins contribute to a better system overall or if most are simply a money grab for people who missed out on Bitcoins early days.”

With bitcoin’s future traipsing up and down rapidly, altcoin’s road ahead seems even more uncertain but as the experts suggest, its best to wait and watch how cryptocurrencies alter global trading and transactions.

The post Altcoins: Another face in the cryptocurrency market appeared first on International Finance.