With all the controversies that ensued in 2022, the question remains of whether it’s still worth investing in crypto this year.
While some have given up on virtual currencies altogether, it’s important to understand the mechanisms behind blockchain technology before making your decision. You must understand that there are different types of blockchains.
This will help you determine whether you want to continue investing in cryptocurrencies.
Here’s what you need to know about the blockchain network:
Public Blockchain
This is often considered among the best blockchains and is what Bitcoin gets based on.
A public blockchain isn’t owned or operated by one entity. Everyone can participate with a public blockchain and see their records on a public ledger. Also, a public blockchain can’t get tampered with or manipulated by a hacker or entity.
Private Blockchain
You might have wondered about the recent market collapses when it came to the NFT craze.
This is because digital assets such as NFTs are based on a private blockchain. These are blockchains that are controlled by private entities. In the case of NFTs, these are controlled by the Ethereum Foundation.
Ether is the preferred crypto to buy and trade NFTs. The foundation can always make changes to the blockchain and this can negatively affect the value of an NFT.
This is why many Bitcoin investors avoid private blockchains at all costs. It’s because of private blockchains that we’ve had controversies such as those with the Celsius Network.
If you decide to invest in a private blockchain, you want to do extensive research first.
Consensus Blockchain
These types of blockchain get controlled by a consensus algorithm. This is a different type of private blockchain.
Rather than being controlled by a foundation or company, it’s controlled by a set of stakeholders. These stakeholders can make changes that affect the blockchain at any time.
This is perhaps the closest example to the whole FTX fiasco. Stakeholders can make changes to the blockchain that benefit some and hurt others.
As a result, your approach with a consensus blockchain should be the same as the private blockchain. Make sure you do your research extensively before deciding to operate within such a blockchain.
Final Thoughts
Now you can decide whether you want to still invest in crypto or not. The simple fact is that there are still many opportunities available.
With Bitcoin, we see the most opportunities. Other cryptocurrencies and blockchains will continue to thrive but should get approached with more caution.
Those Are the Types of Blockchains
Now you know the types of blockchains and can determine if you wish to invest in cryptocurrencies.
The public blockchain is the most popular choice and is what Bitcoin rests on. This has no overarching control and can’t get manipulated at all.
Private blockchains get controlled by a particular company. Consensus blockchains get controlled by a set of stakeholders. With these blockchains, a group of individuals can control the outcome of a blockchain.
Always do your research to decide whether you think the investment is worth it.
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