You definitely must have been hearing about cryptocurrency lately. But I guess you do not know all it entails. If I tell you all the things you should about it know, right now and right here? Sounds great, right? Very well then, you have it here at your fingertips. Let’s go straight to business.
What is cryptocurrency?
Of course, everyone is very familiar with the medium used for transactions in our physical world. Even though these mediums vary with geographical locations. For example, in the United States, we all know dollars as their exchange medium there. Isn’t it? In the same vein, cryptocurrency is the medium of exchange used for online transactions. And just like all other currencies, it can be used to buy and sell.
Find out more information in this complete guide on cryptocurrencies for 2020.
How does this work? It’s simple. Cryptocurrency, otherwise known as a digital currency, works by using cryptographical functions. It is these cryptographical functions that ensure transactions are being conducted.
It would interest you to know that at the time of this writing, there are over six thousand cryptocurrencies available. Quite a shocking revelation, especially to a large number of bitcoin traders. Because Bitcoin is the very first cryptocurrency to exist, it became the most widely known cryptocurrency.
But, that does not in any way limit the functioning of other cryptocurrencies in the industry. Let me give you a small list of the other currencies.
- Ethereum
- Litecoin
- Bitcoin cash
- Binance coin
- Tether
- Tron
- Polkadot
- Chainlink
- XRP
- Crypto.com Coin
- Namecoin
- Stella
- Cardno etc.
Check out this article for a list of the ten best altcoins you can invest in 2020.
Cryptocurrency in action
If you must understand cryptocurrency, then you need to understand the blockchain and decentralized technology. Is the whole thing beginning to bore you? Relax!!! I will guide you through it. In cryptocurrency, there’s a public ledger that stores all transaction information, and this ledger was named as “blockchain.”
The decentralized technology, on the other hand, is fully responsible for storing money and securing payments. The system makes room for users to be part of the network processors even as a single individual.
Do not get confused, but instead picture the blockchain this way. An open database that holds digital information. It’s that easy.
You can therefore send money and receive money to another party via public and private keys.
Without guessing wrongly, the question on your mind now is what I stand to gain using any of this decentralized technology. Check them out.
The benefits of cryptocurrency
- Low transaction fees: The good news is that with cryptocurrency, you don’t have to worry about high transaction fees any longer. When compared to the use of credit cards for transactions, online currencies have relatively low fees. In addition to this, they are free of bank charges and other tariffs.
- No Inflation: There would be no physical currency there that is not at risk of inflation. However, the online currencies are exempted from such.
- Anti-fraud: You should pick up your dancing shoes and get into the celebration mood for this. With cryptocurrencies, the end has come to fraudulent activities usually carried out with credit cards. It is impossible to reverse any transactions made with cryptocurrencies. Theft can also be easily identified due to the technological system of currencies.
There are many fraudulent activities in the crypto space but you can learn how to avoid bitcoin investment scams.
- Easy access: As long as you have your phones or even a good internet connection, you are good to go with your digital transactions. As if that is not enough, cryptocurrencies can be accessed by people from all walks of life. It does not even have anything to do with geographical specifications. However, some cryptocurrencies cannot be used in a particular region.
But notwithstanding, a large portion of people from different regions can access the coins.
- Speed: Cryptocurrencies are significantly faster than in real currencies. Transactions done by cryptocurrencies are usually confirmed within minutes.
- Others: The other benefits of cryptocurrencies include ease of international trade, improved liquidity, increased output, etc.
You can also make money from trading cryptocurrencies by following this cryptocurrency trading guide and strategies for beginners.
The good news is that your cryptocurrency can be stored on the internet, on the computer, or any hardware available. If stored on the internet, if it is undoubtedly secured in the wallet. Let me remind you again that we are referring to a digital wallet and not the ones that can be held.
Choosing the right cryptocurrency
With the unending list of available cryptocurrencies, it could be challenging in choosing the right cryptocurrency to invest in or trade with. We’re going to help you with that by providing you with the three basic factors you should consider before going for any cryptocurrency.
The Value: First and foremost, it is essential you know that the value of a cryptocurrency has nothing to do with its price. A cryptocurrency may have a low price, but this does not translate to a low value. So to check for the value of a cryptocurrency, you would have to take a look at its transactions. A cryptocurrency is considered valuable if there’s a steady transaction taking place.
The supply and demand: You would easily recognize the right cryptocurrency with potentials by merely looking at its demand and supply. Let’s take, for instance, Bitcoin is becoming scarce day by day because the supply has been limited ever since its demand increased. This is one cryptocurrency you would want to deal with even despite its pricing.
The vision: Little wonder why investors would first go through the idea of a cryptocurrency before investing in it? No one would want to invest in an unrealistic goal. Therefore, this also is a critical factor to consider. Before going for any cryptocurrency, you should ensure that you have thoroughly gone through the white paper and, if possible, experts’ forecast on it. This will help you understand the goal of the currency as well as its future.
Conclusion
Government, banks, and financial institutions are beginning to lose their hold on the monetary chain due to cryptocurrencies. The number of people dealing with this virtual currency has grown exceedingly. This irrevocable and decentralized monetary chain is gaining the lead in the present world. Do not be left behind. Be a part of this revolution and enjoy the benefits.
