In many ways, technology has altered the way we work, communicate, shop, and others.
It’s quite apparent that many Filipinos adopted “cashless transactions” or “contactless payments”. In fact, a lot of us depend on our digital wallets like GCash and PayMaya. With just a few taps on our devices, we can pay for our items in grocery stores, pharmacies, and even restaurants.
Now, you probably heard from the news that a new payment system is emerging: cryptocurrencies. The popular ones among the bunch are Bitcoin and Ethereum, but there are others that are gaining momentum. There are more than 2,000 different types of cryptocurrencies, and developers keep on creating more of them every day.
According to a study, most people have heard of cryptocurrency but don’t fully understand what it is. The question here is, is it secure, and how do you invest in it?
What Is Cryptocurrency?
Let’s define first what is cryptocurrency. In a nutshell, it is a digital payment system that doesn’t depend on banks to verify transactions. It’s a peer-to-peer system that can enable anyone anywhere to send and receive payments. In banking institutions, people carry around and exchange physical money in the real world.
But in cryptocurrency, payments totally exist as digital entries to an online database that describe specific transactions. When you transfer cryptocurrency funds, the transactions appear in a public ledger. You store your cryptocurrency in a digital wallet
Cryptocurrency got its name since it uses encryption to verify transactions. It entails advanced coding in storing and transmitting cryptocurrency data between wallets and public ledgers. The aim of the encryption? It is to provide security and safety.
Is Cryptocurrency secure enough?
When you are planning to invest in something, it’s automatic to question its security first. Developers usually create cryptocurrencies through blockchain technology.
Blockchain pertains to the manner that it records the transactions into “blocks” with a time stamp. It’s a complex and technical process. However, it results in a digital ledger of cryptocurrency transactions that are difficult for hackers to tamper with. Note that this doesn’t mean that they are entirely unhackable.
Moreover, transactions always need a two-factor authentication process. For example, you might be asked to enter a username and password to start a transaction. After that, you might have to enter an authentication code that’s sent via text to your smartphone.
Should you invest in crytocurrency right now?
Investments are always risky, but you should determine if the risk is high or low. According to Consumer Reports, some experts think that cryptocurrency is one of the riskier investment choices out there.
On the other hand, digital currencies are also some of the hottest commodities. In fact, the Bangko Sentral ng Pilipinas (BSP) is looking into classifying the game Axie Infinity as an Operator of Payment Systems (OPS) like GCash, PayMaya, and other banks.
Axie Infinity keeps its popularity growing in the Philippines. In line with this, some merchants now accept SLPs as a mode of payment in exchange for products and services.
Basic Tips to Invest in Cryptocurrency Safely
Here are some tips before investing your hard-earned cash in this hot trend:
Before you invest one dollar, learn about cryptocurrency exchanges. Do your research, read reviews and talk with more experienced investors before moving forward.
Learn how to store your digital currency
If you buy cryptocurrency, you have to store it. You can store it on an exchange or in a digital “wallet”. While there are several kinds of wallets, each has its own benefits, technical requirements, and security. As with exchanges, you should investigate your storage choices before investing.
Diversify your investments
Like in stocks, diversification is always a good investment strategy in cryptocurrency. Don’t put all of your investment in Bitcoin, for example, just because it’s popular. You have thousands of options so it’s best to spread your investment around to different currencies.
Get ready for volatility
The cryptocurrency market is relatively unstable, so be prepared for ups and downs. You’ll see dramatic swings in prices. If you don’t have a high-risk appetite or can’t handle that volatility, cryptocurrency might not be a wise choice for you.
Cryptocurrency might be hot right now, but remember, it’s still in its early stages. Investing in something new means challenges and surprises along the way. Be smart and do your research first before testing the waters.
What do you guys think?
Queenie Lasta got her bachelor's degree in Communications Research from UP Diliman. In her free time, she likes to read thriller novels, psychology books, and mangas. She believes in the importance of grit, hard work, and passion to become a great writer in the future.