How Does Bitcoin Impact Other Crypto Currencies?

Bitcoin has had an eventful 2017 with its value soaring from just under $1,000 to more than $60K before swiftly falling back down below $20,000. Other cryptocurrencies have experienced similarly dramatic price swings; their combined worth now surpasses $1.5 Trillion! Regardless of these wild fluctuations, investors and consumers continue to embrace cryptocurrencies like Bitcoin as the ultimate investment vehicle.

Cryptocurrencies, digital currencies that allow online transactions without the involvement of banks or financial intermediaries, such as Paypal or Moneybookers, allow transactions to take place more quickly and cheaply across borders than ever before. Some see them as digital gold while others prefer their decentralized nature – offering protection from government regulation or central bank policy, perhaps? Still others remain fascinated with their technology which is known as Blockchain or Web3.

Blockchains are digital spreadsheets where all buying and selling transactions are recorded, validated by miners – volunteers who solve complex cryptographic puzzles using computers in order to verify each transaction – in return for which they receive bitcoins as rewards for their efforts. Bitcoin mining may be energy intensive but there are other methods which have lesser environmental impacts that allow cryptocurrency mining.

Though Bitcoin’s popularity has skyrocketed, it still is not widely accepted as an exchange medium. Many businesses may not wish to accept payments in a currency that fluctuates wildly in value and takes 10 minutes for validation – with each transaction incurring a $20 fee – though users do have access to exchanges to buy or sell cryptocurrency themselves with private keys.

Investors appear to treat cryptocurrencies like stocks, as their prices appear loosely correlated to equity prices. This could simply be coincidence; or it could indicate that cryptocurrency prices respond similarly to market influences such as when the Federal Reserve raised interest rates in May 2022 and caused both S&P 500 (SPX) and Nasdaq 100 (NDX) prices to drop significantly.

Critics of cryptocurrency see them as an equalizing force that challenges central banks and Wall Street; proponents argue for its democratic benefits while its critics point to price fluctuations, criminal activity risks, and energy usage costs as potential concerns. Whatever their views, one thing is certain – its future remains undetermined, so investors should approach cryptocurrency investments with extreme caution – just as with any financial asset; without properly researching this new asset class they risk experiencing significant losses without proper knowledge about risks and rewards associated with investing. Luckily there are various resources that offer guidance on risks and rewards associated with investing in cryptocurrencies.

Related Posts