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Are cryptocurrencies a store of value or investments?

September 6, 2022

There is a lot of talk about cryptocurrencies, their role in investments and how we can profit from them. While many are hopeful, others are skeptical. Let’s dispel your doubts about the cryptocurrency world and whether these securities are considered a store of value or an investment.

What are cryptocurrencies?
They are nothing but virtual currencies that have no physical form and operate on a blockchain network. The name crypto is used because they work using cryptographic encryption. No one can make copies of cryptocurrencies.

Cryptocurrencies are not backed by any government or economic institution, and so far only Costa Rica has taken the most open steps towards Bitcoin by including it in its official monetary system.

Cryptocurrencies, which have no physical form, are stored in a large database, the blockchain, and customers can store them in what are called wallets or digital wallets. While the blockchain would deserve an article in itself, we can say that it is the basis on which these currencies work, with all transactions being recorded in a unique and unbreakable way.

When we transact with a cryptocurrency, all parties involved need to confirm it. Moreover, it is irrevocable. The main advantage of cryptocurrencies is that they have the potential to revolutionize the world of finance and are a completely universal instrument as they are not subject to any institutional control. However, this can also be their Achilles heel. They are not backed by the Deposit Protection Fund or the Investor Guarantee Fund, as they have no official backing.

What are the 3 most popular cryptocurrencies?
When people talk about cryptocurrencies, they talk about Bitcoin first and foremost. This is the cryptocurrency that started it all. It was created in 2008 and is the result of the work of Satoshi Nakamoto. Today it is not known whether this name refers to a real person or to a group of up to 10 people who started this project. Bitcoin is the reference currency and it can be said that it is basically the currency that everyone looks at. In a single issue, 21 million bitcoins were minted, which is practically its highest number.

But besides this cryptocurrency, there are a huge number of cryptocurrencies operating on the blockchain network, currently estimated to number more than 10,000.

And besides bitcoin, these two cryptocurrencies are probably the most popular: ethereum and binance coin. Still, it would be unfair not to mention Dodgecoin or Cardano.

Ethereum is not a cryptocurrency per se, but the platform on which Ether, its real name, runs. It was launched in 2015 and transactions are done with open-source software, but unlike Bitcoin, they are done much faster. So those who solve the algorithms, the popular miners, can get more rewards. The number of Ethereum is 18 million.

Binace Coin is a cryptocurrency of the popular Binance platform. It was launched in 2017 and runs under the Ethereum blockchain, but it already works on its own. Moreover, this platform is one of the fastest and has the capacity to validate smart contracts that will revolutionize working life, legislation and taxation. Smart contracts will change the game just like cryptocurrencies. Binance Coin is limited to 100 million units.