As cryptocurrency and blockchain technology continues to develop and grow, cryptocurrency’s role in financial stability has begun to be questioned, especially among those within the traditional financial industry. How are these two entities linked? What does this mean for the future of cryptocurrency? Let’s take a closer look at how cryptocurrency and financial stability are connected in order to answer these questions and gain further insight into what the future may hold as cryptocurrencies become more widely adopted.
A Look at Bitcoin
Bitcoin, the first cryptocurrency ever created, has been around since 2009 and is one of the most valuable crypto assets on the market. It is also considered to be one of the safest. Other popular cryptocurrencies include Ethereum, Ripple, Litecoin, Monero, and Bitcoin Cash. All these cryptocurrencies are based on blockchain technology that securely stores transactions in a distributed ledger.
A Look at Ethereum
Ethereum is a cryptocurrency that has been in use for four years now. Although Ethereum had its share of ups and downs, it is still one of the most popular cryptocurrencies on earth. For those who don't know, cryptocurrency is a form of digital or virtual currency that utilizes cryptography for security. Bitcoin, Litecoin, Ripple, and Dash are all examples of crypto-currencies.
Risk Management
Investing in cryptocurrency is an inherently risky financial endeavor. The most significant risks stem from market volatility and high-profile hacks. Though there are many factors that may influence cryptocurrency prices, some people believe that a decline in financial stability at large could lead to increased demand for cryptocurrencies as a hedge against instability. This can result in higher crypto prices or even more widespread adoption, depending on where you look.
Additional Resources
The cryptocurrency market is a volatile one. Just as stock prices can rise or fall, cryptocurrency values can fluctuate wildly in response to world events. And while this may seem like a bad thing to many people, it can actually help stabilize currency markets. Here are three ways that crypto prices could stabilize your finances:
1) It creates stability during economic uncertainty.
2) It increases economic growth.
3) It helps curb inflation.
