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Cryptocurrency has officially entered the mainstream after 2021 was a landmark year. Nearly 1 in 6 Americans Invest, Do Business or the crypto used, according to pew research, The emerging financial instrument has become so established in fact that a common cryptocurrency term has secured its place in a popular online dictionary.

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NS Collins Dictionary The Word of the Year is NFT, an acronym for “fungible tokens” that are traded on the cryptocurrency blockchain. It superseded other topical phrases such as “climate concern” and “hybrid working”.

An NFT is a certificate that represents ownership of a digital asset, such as a work of art or collectible. Virtually any digital file can be converted to NFT, from GIFs and video clips to digital artwork and memes – former Twitter CEO Jack Dorsey’s first tweet sold as NFT for $2.9 million, Reuters informed of.

It is difficult to understand the value of NFTs without a basic understanding of how cryptocurrencies work. Keep reading to learn more about crypto, including whether you should take out a loan to invest. You can do this Compare Rates On a variety of financial products on Credible’s online marketplace.

Is it better to invest or pay off debt?

What is cryptocurrency and how does it work?

Cryptocurrency, also known as crypto, is a digital currency that you can use to buy goods and services. Unlike traditional banking systems, cryptocurrency uses decentralized blockchain technology that securely manages and records transactions.

Among its ardent supporters, crypto is seen as the currency of the future. Some of these investors view cryptocurrency as a long-term investment, betting on its eventual widespread use. Other speculators invest in crypto to capitalize on their short-term gains, which can be challenging. to foretell.

Take bitcoin (BTC) as an example. Since the token was first introduced in 2013, according to the cryptocurrency exchange, its value has increased from around $100 to nearly $58,000 as of November 30. coinbase, In the past year alone, the value of bitcoin has fluctuated between around $17,500 and $69,000.

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Of course, bitcoin is one of the thousands of cryptocurrencies currently on the market. The total value of all cryptocurrencies globally is $2.64 trillion, according to crypto market capHowever, bitcoin makes up the lion’s share of the crypto market. These are the top 10 cryptocurrencies by total market cap:

  1. Bitcoin ($1.1T)
  2. Ethereum ($553.9B)
  3. Binance Coin ($104.7B)
  4. Tether ($73.4B)
  5. Solana ($64.9B)
  6. Cardano ($53.3B)
  7. XRP ($48.2 billion)
  8. USD Coin ($38.7B)
  9. Polkadot ($37.9B)
  10. Dogecoin ($29.3B)

There is an important difference between the cryptocurrencies listed above and NFTs. Fungible cryptocurrency tokens such as bitcoin can be replaced by other fungible tokens. On the other hand, NFTs are unique assets of their kind that cannot be changed, which lends to their overall resale value.

3 ways to start building your wealth even with a loan

Should You Borrow Money to Invest in Crypto?

With the unparalleled growth potential that cryptocurrency offers, you might be wondering how you can achieve this. recently wall street journal The report found that upstart lenders are offering loans backed by cryptocurrency holdings – which some borrowers are using to buy more cryptocurrencies.

However, it is not recommended that you take a loan to invest At all, let alone a volatile asset like cryptocurrencies. This is because it is highly unlikely that the money you get by investing in crypto will offset the costs of borrowing loans.

While your return on investment (ROI) is purely based on speculation, the interest cost of borrowing money is guaranteed. use reliable loan calculator To estimate the cost of borrowing and see this concept in action.

Should I take a personal loan to invest?

3 Reasons to Borrow Money with Long Term Payouts

Although borrow money While buying crypto is not advisable, taking out a loan with interest is not always a bad investment. Here are some examples of how you can repay loans as long-term financial benefits and savings:

  1. You are buying a house. Real estate is an asset that appreciates over time, and housing costs typically work within the borrower’s budget whether they rent or buy. and since mortgage rates Relatively low, it is unlikely that you will lose money to buy a home as long as you borrow within your means and pay off the loan strategically.
  2. You need to finance higher education. Many high-paying jobs require an advanced degree or certification. Borrowing Student Loans, Under Certain Circumstances can pay In the form of higher incomes down the road – although this is not always the case.
  3. You are consolidating existing debt. Debt consolidation loans let you pay off high-interest credit card debt with better terms, such as a lower interest rate. a Recent Analysis predicts that well-qualified borrowers can save about $2,400 by consolidating their credit card debt. Just keep in mind that when you repay the loan amount, do not take on more debt.

Visit Credible to compare loan offers on various financial products, including mortgage, private student loans And debt consolidation loan, It’s free to compare rates, which can help ensure you’re getting the lowest possible rate for your financial situation.

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