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All you need to know about cryptocurrency

 

In recent times, we have been hearing a lot about phrases and terms such as "trading cryptocurrencies," "investing in cryptocurrencies," or names like the digital currency Bitcoin. So, what do all these mean? What are cryptocurrencies? What can you do with them? And is Bitcoin the only digital currency in the world? We will answer all of these questions in today's article, so all you need to do is keep reading until the end.




What are cryptocurrencies?

A cryptocurrency is a form of virtual currency that is encrypted, allowing you to purchase goods and services online. It utilizes a digital ledger on the internet with strong encryption to ensure and protect online financial transactions. The growing interest in these virtual currencies is due to what is known as "cryptocurrency trading," where these currencies are bought and sold to generate real financial profits.

Types of cryptocurrencies and their prices:

Some people believe that there is only one type of cryptocurrency, namely Bitcoin. However, this is not true. According to CoinMarketCap.com, there are more than 6700 digital currencies being traded and dealt with publicly, and the cryptocurrency market continues to see increasing growth every day.

While Bitcoin is considered the most well-known and valuable digital currency, many companies have begun issuing their own digital currencies, which you can use to purchase services and products from those specific companies. It's similar to earning points when you buy goods from a specific website, which you can later exchange for real money to use for purchasing products from the same website (not any other site).

Here is a list of the most popular types of cryptocurrencies and their prices, with Bitcoin leading the list, with a market capitalization of approximately $969 billion.

-Bitcoin: Market capitalization of $969.9 billion

Ethereum: Market capitalization of $222.3 billion-

-Tether: Market capitalization of $33.1 billion

-Binance Coin: Market capitalization of $30.5 billion

-Cardano: Market capitalization of $28.3 billion

-Polkadot: Market capitalization of $28.1 billion

-XRP: Market capitalization of $24.4 billion

-Litecoin: Market capitalization of $15 billion

-Chainlink: Market capitalization of $13.3 billion

-Bitcoin Cash: Market capitalization of $13.1 billion



Importance and Advantages of Cryptocurrencies

Cryptocurrencies have garnered the interest and support of many people worldwide for various reasons, including the following:

1-Potential Future Currency

Many supporters of cryptocurrencies believe that they, especially Bitcoin, will become the official currency in the future. For this reason, they rush to buy them now before their value and price increase. But is this really what will happen? We will address this in the next section related to investing in cryptocurrencies.

2-Decentralization

Cryptocurrencies are not tied to any central authority or entity like banks, for example. Therefore, digital financial transactions do not require an intermediary, eliminating transaction fees. This is something that many supporters of encrypted digital currencies appreciate.

3-Security and Difficulty of Counterfeiting

As mentioned above, cryptocurrencies rely on blockchain technology, which is a decentralized technology for recording and transferring financial transactions. This technology makes cryptocurrency transactions one of the safest methods of payment and money transfer, as the blockchain network cannot be easily hacked, forged, or counterfeited. This aspect makes dealing with cryptocurrencies a preferred option for many.

Investing in Cryptocurrencies

You might be wondering about the topic of cryptocurrency trading, and perhaps you're thinking to yourself: Is investing in cryptocurrencies a wise choice?

In fact, although the price of cryptocurrencies may rise in the future, these investors see this as nothing more than mere speculation. Why? Because cryptocurrencies, like real currencies, do not create any cash flow. To make a profit from them, you must find someone willing to pay more than what you paid to buy these digital currencies.

Therefore, investing in cryptocurrencies differs from investing in a well-thought-out real project that increases in value over time, along with increasing liquidity and profits.

Not only that, but many experts believe that investing in digital currencies like Bitcoin is not entirely safe. Some prominent voices in the investment community have advised potential investors to stay away from them.

Some may ask again here: But isn't Bitcoin a future currency?

It is true that this possibility exists, but it is worth mentioning that for a currency to be adopted as the currency of the future, it must be stable. Stability is something far from Bitcoin and other cryptocurrencies.

For example, the price of Bitcoin (its trading price) was around $20,000 by the end of December 2017, but its value plummeted to around $3,200 just one year later, only to rise again to unprecedented levels in 2020.

Due to the significant instability in the prices of Bitcoin and cryptocurrencies in general, it is unlikely that they will be spent and used at present. Those who buy these currencies will likely hold onto them, hoping for their value to increase multiple times in a year or less.

All of the above factors make investing in and trading cryptocurrencies a bad choice, at least for the present time, due to the significant risks involved in this investment process.

How to Buy Digital Currency?


Even after becoming familiar with all the risks associated with investing in digital currencies and heeding experts' advice to stay away from this field, you may still wish to purchase digital currency and hold onto it for the future.

Who knows, things might really change, and trading digital currencies could become a safer option. That's why it doesn't hurt to know how to buy these currencies.

You can actually purchase some digital currencies for real fiat amounts in US dollars, while other types of cryptocurrencies require payment using Bitcoin or any other digital currency.

To buy cryptocurrencies, you need a digital wallet and an online application to store your funds, where you'll first need to create an account with one of the digital currency trading platforms. Then, you'll transfer real fiat amounts to it to buy the digital currency you want, such as Bitcoin, Ethereum, or others.

 

Thus, we find that the digital currency market is not as straightforward or entirely safe as some may think. Like any other trading market, it involves numerous risks alongside its advantages and positives.



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