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What is cryptocurrency, and why is it more valuable than gold?
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The cyrptocurrency markets are booming, but still many people have little idea what they are, and if they should even be involved. What is cryptocurrency, and why is it so popular? Should Catholics trade it?
LOS ANGELES, CA (California Network) - Cryptocurrency is a digital asset, that functions like money. But there are a few key differences. For one, cryptocurrency, or crypto for short, is anonymous. It's functions like cash does. The buyer and sender never need to know one another, and never need to meet, because the exchange happens online. In fact, each trade happens thousands of times, across the internet as each trade is reported to different virtual ledgers across the internet. This distributed method of accounting makes the system virtually hack-proof.
Originally, the anonymity offered by crypto transactions made it attractive on the black market, where people could move wealth digitally without being traced as they would be via banking records. The transactions can take place within minutes, thus allowing money to move swiftly.
However, bitcoin quickly went mainstream as many people around the world saw it as a way to legitimately transact online without involving banks. Banks in their greed, tend to hold people's money for a few days each time. They withdraw money right away, but pay it out with delays. Cryptocurrencies avoid this inconvenience. Over the years, Bitcoin has become a mainstream form of money to many people, who use it to buy and sell virtually anything.
You can buy Bitcoin and other cryptocurrencies on any number of digital exchanges, the same way you would buy any other foreign currencies. The important difference is you only hold the coin in digital form.
Since the invention of Bitcoin, a number of other cryptos have been developed, each one with particular advantages. Bitcoin is the original crypto, and is the most valuable by far. It's like gold. Others, like Ethereum offer better security and faster transaction times. Some emphasize security, others transaction times, and some offer no value, but are popular because they are based on memes. Dogecoin is one example. Dogecoin, like all other meme coins, have value only because people like them.
Cryptocurrencies are most commonly traded by speculators, so the markets tend to be volatile. A lot of money can be made or lost in a short time. Some even compare crypto trading to gambling, although with better odds, if you know what you are doing.
Like with any form of investing, a person should not put all their money into cryptocurrency. And the best strategy isn't to trade the asset, but to hold it over the long term, trusting it to grow in value over time. Cryptos like Bitcoin and Ethereum have good value and will likely increase in price as they gain mainstream acceptance. However, meme coins like Dogecoin, ought to be avoided. Without some kind of underlying value like faster or more secure transactions, they have little purpose to justify their prices.
It is impossible to say if cryptocurrencies will hold their value indefinitely. In fact, it's unlikely they will. Someday, cryptocurrency will be worth nothing. However, a savvy investor can buy now, hold, and exit before that day comes, and turn a nice profit.
Is it appropriate for Catholics to trade crypto? There is no rule against it, as long as it doesn't become more important to a person than God, or their love of neighbor. In other words, it can be dangerous as a temptation and a distraction, but no more so than money, or any other economic activity.
We must remember, our real treasures are not those stored in the virtual realm, but in heaven. In other words, where we are going, we won't need cryptocurrency. However, in the meantime it could be fun to buy and hold, as it appears likely to increase in value for a little while yet.
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