Crypto, or digital currencies like Bitcoin, allow people to buy a growing number of products and services. Insurance, consumer staples, luxury watches and event tickets are some of the items that can now be bought with virtual money. The list grows daily as more consumers and businesses become familiar with the technology.
In general, to spend cryptos you need to first purchase them on a cryptocurrency exchange with regular money or earn them by mining. You then move them to a wallet for safe storage. You can find wallet apps for most major cryptocurrencies on mobile app stores or the web. Once you have a wallet, you can use it to pay for goods and services. At checkout, sellers will often show a QR code or wallet address that you can scan or enter to complete the transaction.
You can also use crypto to make charitable donations. The popularity of the tech has given rise to several crowdfunding platforms that let you give to nonprofits in exchange for crypto.
The main drawback of crypto is that it doesn’t offer the same consumer protections as more traditional financial products. It’s difficult to protect yourself from hackers and scammers, and transactions are usually not reversible. It’s important to research the security features of any crypto you plan to invest in before purchasing, and to keep a backup on paper or in an offline computer if possible.
Another concern is that a large share of the crypto market is unregulated. Regulators have been reluctant to extend deposit insurance or other safety nets to crypto investors. If the price of your crypto tumbles, you could lose a significant chunk of your investment. You can reduce this risk by using only reputable exchanges and moving your crypto to a wallet as soon as you get it.
It’s also a good idea to consider how a crypto investment fits into your overall financial goals. If you’re relying on it to fund retirement, for example, it might not be a good idea. The crypto market is highly volatile, and prices can rise and fall dramatically. If you can’t handle a big upswing in your investments or your mental wellbeing, it might not be a good idea to invest in crypto.
Investors need to be prepared for the fact that crypto can be a volatile investment. It’s worth keeping in mind that the current price of Bitcoin is about a third of what it was at its peak in 2017. Even so, some experts say the cryptocurrency could be valued at $250,000 per coin by 2028. It’s a long way off, but it shows how much demand there is for digital currency. In the meantime, investors should keep their portfolios diversified and stick with a savings plan to reach their financial goals. It’s always wise to talk with a certified financial planner before investing in anything, including crypto.