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Cryptocurrencies: Are they a good investment?

A very hot topic in the current day is whether you should invest in cryptocurrencies like bitcoin or not. Most people know how volatile the value of bitcoin can be, but is the risk worth it? In this article we will discuss the future of bitcoin and other cryptocurrencies.

Should you invest in Bitcoin?

Bitcoin is by far the most famous and most valuable cryptocurrency out on the market. It was created by Satoshi Nakamoto, an anonymous developer or group. Being one of the first cryptocurrencies on the market comes with many upsides and downsides.

Bitcoin uses Proof-of-Work to verfiy transactions. This means that computing power is used to validate the transactions and it is also how bitcoin mining works, by letting your computer validate a transaction you get rewarded with some bitcoin. This concept was created to decentralize the currency, no one person or group should be able to control the blockchain but the whole network together. Proof-of-Work has however somewhat lost its purpose as the market has started to manufacture special built hardware, ASIC’s, that are solely used for the purpose of mining bitcoin. This leaves very little power to an ordinary person using their personal computer. Proof-of-Work has also been critizied for being bad for the environment since it consumes a lot of electricity and power.

Bitcoin also has some scalability issues. The way the blockchain works right now prevents it from handling a massive amount of transactions every second which stops it from being able to be used as the one world-wide currency.

Should you invest in Ethereum?

Etherum is the second largest cryptocurrency and is basically bitcoin with more features. You can trade ETH and use it as a currency, but Etherum is also programmable, meaning programs can be created on the blockchain. Another very common usage for Ethereum is Non-fungible tokens or NFTs. You can read our article about NFTs if you are interested in learning more about them.

Ethereum also uses Proof-of-Work which comes with the same issues as stated above for bitcoin. The scaleability for Ethereum is the biggest problem this cryptocurrency faces right now. With the recent rise of popularity in NFTs, the Ethereum blockchain is heavily loaded with verification requests and the transaction fees have reached five times as much as the transaction fees for bitcoin.

Should you invest in Cardano?

In comparison to Bitcoin and Ethereum, Cardano is a very small cryptocurrency, however it has gained a lot of traction lately. Cardano aims to build on Ethereum and solve the scaleability issues that it possesses.

Instead of using Proof-of-Work, Cardano uses Proof-of-Stake, meaning that big holders of Cardano get the voting power during the verification process. Cardano is also built by a decentralized team, which is different from bitcoin and ethereum. Cardano is also programmable and could, and has, been used to create NFTs. Cardano also aims to become “the internet for crypto”, meaning they want to connect all cryptocurrencies together and make them compatible thorugh Cardano. This would allow for seemsless transactions between different cryptocurrencies. It is an ambitious project that if successful could become a very valuable and well-used cryptocurrency.

Disclaimer: Our articles are for educational and/or entertainment purposes only. Nothing on this website should be construed as financial advice or a recommendation to buy or sell any sort of security or investment.