What are cryptocurrencies
Cryptocurrencies, as they are briefly called cryptocurrencies, are a payment method that can be traded without the need for central monetary authority such as governments or banks.
Instead, cryptocurrencies are created by using encryption techniques that make people able to buy, sell, or trade them securely.
Cryptocurrencies can be replaced by goods and services, although they are often used as investment instruments.
Cryptocurrency is also an essential part of the operation of some decentralised financial networks, with digital codes being an important tool through which different financial transactions can be carried out.
Bitcoin is the most common cryptocurrency in the world, especially since its price has fluctuated since its release and during its trading date.
In 2021, bitcoin hit an all-time high of more than $65,000 before falling back.
How do you invest in cryptocurrencies?
While some cryptocurrencies, including Bitcoin, are available for purchase in US dollars, some others need to use Bitcoins or other digital currencies to be purchased and traded.
In order to buy cryptocurrencies, you will definitely need to open a digital wallet — an online app that can keep your currency.
In general, you can create an account on the stock exchange, after which you can transfer real money to buy digital currencies such as Bitcoin or Ethereum.
Who are the online brokers who provide cryptocurrency trading?
If you're more accustomed to traditional brokerage accounts, you'll find that there are a few online brokers who have access to cryptocurrencies as well as stocks.
If you're looking for a stock exchange that only works within the world of cryptocurrency, look for platforms that specialise only in cryptocurrency searchers. Although these platforms, such as Coin base, Gemini and Brakemen, will not provide you with the possibility to trade on core assets such as stocks and bonds, they usually contain a much better range of cryptocurrencies and more wallet utilities.
How many cryptocurrencies are there?
In general, about 16,000 digital currencies are traded, according to CoinMarketCap.com, a market research specialist. Cryptocurrencies continue to spread and increase in their types.
The total value of all cryptocurrencies as of December 23, 2021 was about $2.3 trillion, down from an all-time high of above $2.9 trillion a week ago.
Best cryptocurrencies in terms of market value
Here are the top 10 cryptocurrencies for trading by market value, according to CoinMarketCap, which provides data and analysis on cryptocurrencies.
The market value of cryptocurrencies
- Bitcoin: $923.2 billion
- Ethereum: $470.6 billion
- Penance currency: $88.6 billion
- Tether: $77.4 billion
- Solana: $56 billion
- XRP: 46.6 billion
- Cardano: $46 billion
- USD: $42.4 billion
- Terra: $34.1 billion
- Avalanche: $29.3 billion
Why are cryptocurrencies so popular?
People invest in cryptocurrencies for a variety of reasons, the most famous of which are:
- Advocates of cryptocurrencies such as Bitcoin see the currency of the future as the currency of the future and are quick to buy it, and expect it to become more valuable
- Some cryptocurrency supporters like the fact that these currencies eliminate the idea of central banks managing cash supply, especially as they tend over time to devalue funds through inflation and rising prices.
- Many people support the technology behind cryptocurrencies, called block chain, because it is a decentralised processing and recording system and may be safer against traditional payment systems.
- Some like cryptocurrencies because of their high value and don't care about long-term currency acceptance as a way to move money.
Are cryptocurrencies a good investment?
The value of cryptocurrencies may rise, but many investors believe this is just speculation, not real investment.
The reason for this is that cryptocurrencies do not generate any cash flow like real currencies. Therefore, in order to win, someone has to pay more for the currency than you do.
This is called the theory of "greater deception" in investment.
This can be compared to well-managed business, which increases its value over time by increasing profitability and cash flows for this investment.
"For those who view cryptocurrencies such as Bitcoin as the currency of the future, note that the currency needs stability."
Some prominent voices have emerged in the investment community to advise potential investors to stay away from them. It is particularly noteworthy that legendary investor Warren Buffet compared Bitcoin to paper checks and said: "It's a very effective way in which money can be transferred and you can do it anonymously. The check is also a way to transfer money too.
But are the checks worth paying a lot of money? Just because she can transfer money? “
For those who see cryptocurrencies as the currency of the future, they need to know that the currency needs stability so that traders and consumers can determine the fair price of goods.
The movement of bitcoin and other cryptocurrencies has never been stable for most of its history.
For example, while Bitcoin traded for nearly $20,000 in December 2017, its value then fell to about $3,200 a year later.
By December 2020, Bitcoin had traded at record highs again.
This price volatility presents a dilemma in itself.
If bitcoin is worth much more in the future, people are not expected to spend and trade it today, making it less applicable as a currency.
Why spend bitcoin when it could be worth up to three times its value next year?
Are cryptocurrencies legal?
There is no doubt about the legality of cryptocurrencies in the United States of America, although China has banned their use in a way.
Ultimately, the legality of digital currencies depends on each country.
But even in countries that don't ban cryptocurrency trading, you have to think about how to protect yourself from fraudsters who see cryptocurrencies as an opportunity to entice investors.
How do I protect myself from the risks of trading cryptocurrencies?
First of all, you should know the exact details of any trading company to get this information:
- Who owns the company? Is the owner known? If it is known, this is a positive sign.
- Are there other big investors investing in your chosen digital currency? If yes, this is a good sign if these big famous investors want to own a piece of this currency.
- Are you going to have a stake in the company or just a coin? This distinction is important, as owning a share means that you can participate in its profits (i.e. you will be the owner). While buying codes simply means that you are entitled to use them.