It was in 2009 when the first decentralized cryptocurrency, bitcoin, was created. Despite the downturn of the value of virtual currencies in 2018, cryptocurrency like bitcoin in the Philippines will continue to gain. The financial technology in the country is advancing as the locals recognize the flexible use of having mobile wallets. Moreover, a huge percentage of Filipinos have no bank account which is why virtual currency provides them a new option for making financial transactions. Before diving right into the world of cryptocurrency, educate yourself on the possible risks and things to consider. Below are some of them listed to enlighten your way towards gaining virtual currency.
Understand The Basics
In order to fully grasp the risks associated with investing in cryptocurrency, it is a must to understand the platform, termed as Blockchain, on which the currency is based. To simplify everything, the reason why the exchanging, buying and holding of virtual currency is decentralized because Blockchain presents itself in the same nature. Blockchain is a digitized, decentralized public ledger of the world’s cryptocurrency transactions. With this, there is no central recordkeeping but the participants are allowed to keep track of their transactions. Finally, the platform includes the following characteristics:
Transactions are irreversible: no transactions can ever be reversed. Once the virtual currency has been confirmed to transfer, there is no taking it back. Everyone and everything is anonymous: everything about cryptocurrency is digitized, no accounts or even transactions are connected to the real identities of participants. Speedy-sending globally: there are no third parties to verify and validate transactions. Once confirmed, the transaction pushes through within minutes. Regardless of the location. It is secure: the strong cryptography of the platform makes the scheme difficult to tap or penetrate. There is no gatekeeper: send cryptocurrencies around the world for free through the software.
Consider the Inherent Risks
The cryptocurrency market is unpredictable. Several risks are associated with investing in cryptocurrency which includes risks in cyber or fraud, regulatory or compliance, market, and business. Digesting each risk will allow you to gauge whether it is worth to invest your hard-earned money in cryptocurrency.
Essentially, cryptocurrency is cash currency. With this, the system is susceptible to criminal activities and frauds. Since the Blockchain platform is digitized, all transactions are made online. These criminals and hackers found the opportunity to create spoofing or phishing malware that has the ability to steal cryptocurrency by infecting individual computers. Once a computer has been infected with the virus, hackers begin draining their crypto wallets. On a larger scale, these hackers can break and have access to crypto exchanges.
Lose The Key, Lose The Money
It is impossible to recover stolen keys to a user’s wallet. The thief can impersonate the original owner of the stolen account which gains them the same access to the available money in the wallet. Once the Bitcoins are transferred out of the account the transaction has been confirmed and entirely committed to the blockchain, those monies are lost forever. In a similar way, if a user loses his keys by accident, there is no way to retrieve it. This is due to the fact that there is no centralized office that manages all the accounts. Going back to the nature of the platform of blockchain, it is decentralized. Thus, lost key means lost money.
Ways to Earn: Mining or Buying
If you have decided that the inherent risks associated with investing in cryptocurrency is something that you can manage, make sure to establish your bitcoin wallet before buying any virtual currency. You wallet is where you can store your cash and credit cards that you will use in purchasing. There are three options that allow you to store your crypto coins: software wallet stored in a hard drive, through an online web-based service, or a vault service or multisig wallet that protects your monies with the use of keys.
Once you have chosen the right storage that fits your preferences, the most critical task comes next. That is, to realize if the bitcoin price is worth your hard earned cash. Cryptocurrency is volatile, it fluctuates every minute just like how other foreign currencies do. The all-time high worth of Bitcoin amounted up to 10,350 US dollars. If you think it is not worth the risk, there is another option which is “mining”.
Mining, as the terms suggests, is like digging for gold or “money” online. Since the platform blockchain does not have a central regulator, mining is technically legal. Mining requires a special software to solve math problems wherein the computer must come up with the right combinations of 64 digits. Acquire the correct answer and you get bitcoins in exchange.
Key Takeaway
In the Philippines, bitcoin is the most popular form of cryptocurrency investing.Like any other type of investment, perform due diligence and research about cryptocurrency before plunging into the world of anonymity and virtual currency. Considering the risks will save you from future regrets and endless could or should-haves.
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