I have seen several recent stories of people who have lost their money in cryptocurrency schemes. Ideally one should not invest in things they don’t understand. To shed more light on this crypto business I did some digging around on the internet. Here is what I have learned so far.
Cryptocurrency (crypto) is some kind of digital money used to transact on the internet. It is not regulated and not controlled by any single individual. Bitcoin was one of the first and still one of the most popular cryptocurrencies around. There are many other cryptocurrencies available.
The underlying technology is called blockchain. A blockchain is some kind of growing chain of blocks of data. For a block of data to be added to the chain it should be validated by everyone on the network. Once a block of information is added onto the network it cannot be changed by anyone without the consensus of everybody else. This makes the blockchain a very secure, democratic, and anonymous way to record and store information. This gives blockchain technology its power.
This technology is now finding useful application in all sorts of areas including managing contracts, elections, government records, banking, health, mobile money etc. Blockchain technology is set to revolutionize the way we transact online.
Cryptocurrencies can be exchanged for real money like US dollars. As such it has attracted investors, speculators, and criminals alike hoping to make a kill. However the currency exchange is not regulated by anyone and is thus susceptible to wild fluctuation on a daily basis. For instance in November 2015, one bitcoin was equivalent to Ushs 1.0m. It then went up to Ushs 70m in December 2017 before falling to Ushs 27m in November 2019.
So many people lost and made money at the same time trading crypto. It also attracted many fraudsters who stole people’s hard earned money. Trading in crypto is very risky business. There are no guaranteed returns. Anyone who promises you guaranteed returns trading crypto is lying to you.
I would recommend you stay very far away from crypto investments unless you really understand what you are doing. However if you are a gambler at heart and like the thrill of making and losing money please proceed. In any case make sure you do your due diligence on whoever is selling you crypto. Also limit your investment to money you are absolutely willing to lose. Don’t mortgage your house to buy crypto. That is foolish.