Bitcoin, Blockchain, and Cryptocurrency are some of the words you frequently come across these days. It’s very common to hear, “Invest in Cryptocurrency. It’s easy money”. Is it true? What is Cryptocurrency all about? What is the science behind cryptocurrency? What are some Cryptocurrency facts you should know?
Let us read further and find out what Cryptocurrency is, how it works, and the best cryptocurrencies to invest in.
- Understand what is Cryptocurrency
- Get a view on this risks involved in Cryptocurrency
- Know the Top 10 Cryptocurrencies to invest in
What is Cryptocurrency?
In Cryptocurrency, there is absolutely no physical coin and notes. It is entirely is online. In short, it is digital money.
Cryptocurrencies are decentralized networks based on blockchain technology, which is a network that is distributed across a large number of computers.
With the decentralization feature of cryptocurrency structure, no government has control over them and they exist entirely independently. No central authority can either interfere or manipulate cryptocurrency.
You can transfer cryptocurrency to someone online without a go-between, like a bank. Bitcoin and Ether are well-known cryptocurrencies, but new cryptocurrencies continue to be created.
Cryptocurrency can be used to buy common goods and services online, though cryptocurrency is seen as an investment by many similar to stocks and assets.
Why is Cryptocurrency risky?
Trading in cryptocurrency is risky as it is highly volatile. There are many unexpected changes in the markets. Since cryptocurrency’s value depends on several factors, a small trigger in any of these factors can lead to the drop of hundreds of dollars in cryptocurrency, highly affecting people’s investment.
The primary reasons contributing to the volatility of cryptocurrency are
It is an emerging market.
Cryptocurrency is new to the market, and The market size is minimal and smaller prices can have a large effect on the cost of cryptocurrency
It is entirely digital.
Cryptocurrency is entirely digital, and its value depends on supply and demand. It is not backed by any government but is just supported by people’s faith and trust in the currency. Their price entirely depends on what people think of the cryptocurrency’s future. If they believe it will increase, the demand increases, and so does the cost and vice-versa.
Cryptocurrency is monitored by technologies like blockchain and other emerging technologies, which are still in the development phase. It will take time for the market to mature, which makes it volatile at the moment.
As cryptocurrency is entirely digital, media is the only source of information for cryptocurrency. This often leads to various articles and news having a significant impact on the price of the cryptocurrency.
Must Read: Financial Risks
How to Invest in Cryptocurrency?
There are several cryptocurrency exchanges that are like an online store for currency. You make an account, place orders, and start investing in them!
Top 10 Cryptocurrencies
Bitcoin, also known as BTC is the largest and most popular cryptocurrency. It was the first cryptocurrency that was launched. It was established in 2008 and is the first-ever cryptocurrency. Bitcoin dominates the Cryptocurrency sector. It is known as the market ticker with a market capitalization of $1.01 trillion.
Bitcoin’s hit its highest value at $58,000.
Etherum also known as ETH, is the first Bitcoin alternative. The main goal of Ethereum is to create a decentralized suite of financial products that everyone around the world can access, irrespective of one’s nationality, ethnicity, or faith. It was launched in 2014
Etherum has recently seen a surge in it’s price and is now $1,958
Litecoin also known as LTC, was launched in 2011. It is known as the “silver to Bitcoin’s gold”. Litecoin is built on an open-source global payment network.
Central authority does not control this network like any other cryptocurrency network. It can be decoded with help of CPUs of consumer-grade called the scrypt.
The advantage of Litecoin over Bitcoin is that Litecoin has a quicker block generation rate which therefore provides a faster transaction confirmation time.
It has a market cap of $10.1 billion and a per token value of $153.88. It is the sixth-largest bitcoin in the world.
Polkadot also known as DOT, was created aiming at delivering interoperability between other blockchains.
The creators of Polkadot say that “ Polkadot’s protocol is designed to connect permission and permissionless blockchains as well as oracles to allow systems to work together under one roof.”
The major advantage of Polkadot is that developers can create their own blockchain by using the security Polkadot’s chain offers.
Polkadot has a market capitalization of $11.2 billion, and each DOT trades for $12.54.
Tether also known USTD, was launched in 2014 and describes itself as “A blockchain-enabled platform designed to facilitate the use of fiat currencies in a digital manner.”
Tether was one of the first stable coins and is one of the most popular cryptocurrencies. These cryptocurrencies aim at reducing the volatility of the market. They aim at smoothing price fluctuations and target people who are cautious and want to trade safely.
Major advantage of Tether is that it’s price is tied directly to the US dollar making it easier for the users to transfer this cryptocurrency to the US dollar in a shorter period when compared to the other cryptocurrencies.
Tether is the third-largest in the world with a market cap of $24.4 billion and a per-token value of $1.00.
Monero also known as XMR, was launched in April 2014. This is an open source cryptocurrency that is private, extremely secure, and untraceable.
The development of Monero was wholly based on donation and was entirely community driven. This cryptocurrency has a special technique called the “ring signature”. In this technique, a group of cryptographic signatures appears. This group includes at least one actual participant, but since all the signatures appear valid, it is difficult to find the real one.
This unique security mechanism gave Monero a way to be linked to criminal operations across the globe.
Monero has gained the limelight with its popularity in illegal communities.
Monero has a market cap of $2.8 billion and a per token value of $158.37.
Uniswap, also known as UNI, is an entirely different type of exchange which completely decentralized. It is not owned and operated by a single establishment. A new trading model called the automated liquidity model is used in Uniswap.
Uniswap was built in 2018. It is entirely open source meaning that anyone worldwide has access to copy the code and create their own decentralized exchanges.
Uniswap has a market capitalization of $$15,2 billion, and each UNI trades for $29.21.
Cardano also called ADA, is regarded as an “Ouroboros proof-of-stake” cryptocurrency.
Cardano was created by a bunch of engineers, mathematicians, and cryptography experts by following a research-based approach.
Cardano was developed with the aim of being the financial operating system of the world by establishing decentralized financial products and providing various solutions for problems like chain interoperability, voter fraud, and legal contract tracing.
Cardano has a market capitalization of $9.8 billion, and one ADA trades for $0.31.
Ripple, also called XRP, was first released in 2012. This cryptocurrency focuses on a digital payment network for financial transactions.
XRP is different compared to others as it uses a network of validation nodes rather than blockchain.
Ripple XRP has a market capitalization of $26,8 billion, and each XRP trades for $0.5926.
Binance Coin, also BNB is a utility cryptocurrency that is operated as a payment method for the fees linked with trading on the Binance Exchange.
Binance Coin gives an advantage for people as with Binance Coin. They can trade at a discount. Binance exchange is one of the extensively used exchanges across the globe, depending on the trading volume.
Binance Coin has a $6.8 billion market capitalization, with each BNB having a value of $44.26.
Conclusion: Cryptocurrency Facts
Cryptocurrency has several advantages. Some of the benefits include protection from inflation, users’ privacy, easy currency exchange, cost-effective mode of money transfer, and quicker transactions.
On the other hand, Cryptocurrencies’ disadvantages include their susceptibility to getting hacked, power to a single organization operating the cryptocurrencies that could be misused, volatility, and flexibility to be used for illegal activities.
It is advisable to understand the functioning and the risks involved before investing in Bitcoin.
If you Bitcoins interest you, you must check this out.
- What are the best crypocurrencies to invest in?
Bitcoin, Etherum and Polkadot are recommended for long term investment as they have lesser risk associated compared to other cryptocurrencies.