Cryptocurrencies allow you to buy goods and services and exchange them for profit. Here we will explain what cryptocurrencies are, how to buy them and how to protect yourself.

Encrypted currency (or cryptocurrency) is a digital currency that can be used to purchase goods and services, but uses an online office with strong encryption to protect online transactions. Most interest in these unregulated currencies is for profit, and traders sometimes raise prices.

Here are seven questions to ask about cryptocurrencies and some things to keep in mind.

What is cryptocurrency?

Cryptocurrency is a payment method that can be redeemed for goods and services online. Many companies issue their own coins, often called tokens, that can be redeemed specifically for the goods and services offered by the company. Think of it as a gaming chip or a casino chip. To access goods and services, you must exchange your real currency for cryptocurrencies.

Cryptocurrencies work using a technology called blockchain. Blockchain is a decentralized technology that is distributed on many computers that manage and record transactions. Security is Part of the appeal of this technology.

How many cryptocurrencies are there & their worth?

There are 6,700+ different cryptocurrencies are traded, according to research conducted by CoinMarketCap. And cryptocurrencies continue to grow exponentially, raising capital through initial coin offerings (ICOs). According to Coin Market Cap, the total value of cryptocurrencies on April 13, 2021 exceeded $ 2.2 trillion, and the total value of bitcoins, the most popular digital currencies, was approximately $ 1.2 trillion.

The best cryptocurrency with market value

These are the 10 largest cryptocurrencies with market capitalization that are tracked by cryptocurrency data and Coin Market Cap analytics provider.

CryptocurrencyMarket Capitalization
Bitcoin$1.2 trillion
Ethereum$263.4 billion
Binance Coin$87 billion
XRP$81.8 billion
Tether$45.4 billion
Cardano$44.7 billion
Polka dot$39.3 billion
Uniswap$18.8 billion
Lite coin$18.1 billion
Stellar$14.9 billion

Why are cryptocurrencies so popular?

Cryptocurrencies attract their fans for various reasons.

Here are some of the most popular:

  • Proponents of cryptocurrencies such as Bitcoin are seen as the currency of the future and are buying to buy them, perhaps before they become more valuable.
  • Some fans like the fact that they control the cryptocurrencies of central banks from controlling the money supply. This is because these banks tend to reduce money through inflation over time.
  • Other sponsors such as blockchain are cryptocurrency technologies, decentralized registration and processing systems that can be more secure than traditional payment systems.
  • Some traders prefer cryptocurrencies because the value of cryptocurrencies is rising and they are not interested in accepting currencies as a way to move money.

Is cryptocurrency a good investment?

The value of cryptocurrencies can increase, but many investors consider them more than just a real investment, just speculation. the reason? Like real coins, cryptocurrencies do not generate cash flow, so someone has to pay more to make a profit.

This is the so-called stupid investment theory. This is in contrast to a well-run business that increases its value over time as the business increases profitability and cash flow.

For those who see cryptocurrencies like Bitcoin as the currencies of the future, it should be noted that currencies need stability.

As the authors of Nerd Wallet pointed out, cryptocurrencies such as bitcoin may not be very secure, and some of the significant voice of the investment community is the voice of potential investors. Of particular interest to Warren Buffett is the legendary investor who compares bitcoin to paper checks. Checks are also a way to send money. Are checks expensive? Can you send money?

For those who see cryptocurrencies such as Bitcoin as the currency of the future, it should be noted that the currency must be stable so that traders and consumers can determine the appropriate price for their products. Bitcoin and other cryptocurrencies have not been stable for most of their history. Bitcoin, for example, traded at about $ 20,000 in December 2017, but dropped to about $ 3,200 a year later. In December 2020, it traded again at record levels.

This price fluctuation creates a difficult problem. If the value of bitcoin is likely to increase in the future, then people today can spend less and circulate it, and this will make them less durable as a currency. Why use bitcoin when it is worth three times as much as next year?

How do I buy cryptocurrencies?

Some cryptocurrencies, including bitcoin, can be purchased in US dollars, while others require you to pay for bitcoin or other cryptocurrency.

To buy cryptocurrencies, you need a wallet, an online application that can contain coins. You can usually create an account at an exchange office and send real money to buy cryptocurrencies such as Bitcoin and Atrium. Learn more about investing in Bitcoin.

Coin base is one of the most common cryptocurrency exchanges where you can create wallets and buy and sell bitcoins and other cryptocurrencies. Also, an increasing number of online brokers offer cryptocurrencies such as eToro, Tradestation and Sofi Active Investing. Robin Hood offers free cryptocurrency trading (Robin Hood cryptography is available in most, if not all, US states).

Is cryptocurrency legal?

China basically bans its use, but there is no law in the United States. Ultimately, it depends on the country. Also, be sure to consider ways to protect yourself from fraudsters who see cryptocurrencies as an opportunity to offend investors. As always, buyers need to be careful.

How can I protect myself?

If you plan to buy cryptocurrencies at the ICO, read the details of the company manual for this information.

  • Who owns the company? Identifiable owners are a positive sign.
  • Do other major investors invest in it? If other famous investors want something from coins, this is a good sign.
  • Do you own the shares of this company or do you only own the currency or the password? This distinction is important. Having a share means that you can share in that income (you are the owner). On the other hand, buying tokens means that you are eligible to use them, such as casino chips.
  • Is the coin already produced or does the company intend to raise money to develop it? The more you follow the product, the less risk there is.

It may take a long time to review the booklet. The more details you have, the more likely it is to be legal. But even legitimacy does not mean the success of coins. This is a completely different question and you should be familiar with the market.

However, beyond these worries, having simple cryptocurrencies puts you at risk of theft as hackers try to break into the computer network that contains your assets. A popular money changer went bankrupt in 2014 after hundreds of millions of dollars of bitcoins were stolen by a hacker. These are not the usual risks of investing in stocks or funds in major US exchanges

Cryptocurrencies are an extremely speculative and volatile purchase. Trading stocks of established companies is usually less than investing in cryptocurrencies such as bitcoin.

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