Have you ever been suggested to invest in crypto? You’ve probably heard of the Bitcoin explosion that made average people into millionaires overnight.
However, you also know of someone close that lost everything after they invested in crypto.
This begs many questions –
- What is ‘Crypto’?
- How is it acquired?
- What makes it the hottest new trend for investors?
- And more importantly….Is it safe?
By the end of this read, we guarantee you’ll understand a thing or two about cryptocurrency.
Table of Contents
What is Cryptocurrency?
In short, Cryptocurrency is a digital asset that you own. It’s like having a pile of digital notes stored in a digital wallet.
Cryptocurrency is generated through a complicated process called mining. Imagine a complex problem that needs to be solved, and your computer is assigned to solve it. The reward for solving that problem is a piece of crypto.
Crypto is encrypted and stored on a public ledger called – The Blockchain.
For an easy explanation of blockchain technology, think of a digital ledger that records every transaction that can be duplicated at will and distributed over various computer networks across the world.
The best part about blockchain technology is it’s almost impossible to hack and cheat the system. Notice, we said ‘almost’. This is because there are still certain possibilities for hackers to get through to your digital ledger.
The most popular cryptocurrency in the world is Bitcoin.
What is Bitcoin?
Surely by now, we are all aware of the term ‘Bitcoin’. The reason it made waves across the world is that it’s the very ‘first crypto’ and the most accepted form of crypto payments globally.
Bitcoin was launched in 2009 by a relatively unknown person or group, only known as – Satoshi Nakamoto. The smallest unit of BTC (short for Bitcoin) is called Satoshi.
The reason for Bitcoin’s inception varies. But it’s widely accepted that Bitcoin was created to fight the banking system and partly due to the 2008 recession.
What makes Bitcoin transparent is that every piece of information is available on the public ledger.
Today, Bitcoin has a $700 billion market cap.
Are Cryptocurrencies Safe?
As with all new things, we are doubtful about their purpose. After all, there are horror stories about your work colleague losing all their life savings in crypto.
First things first. Crypto isn’t gambling.
It’s similar to stock trading and comes with a list of pros and cons.
Unlike stock, crypto is extremely volatile to market movements.
The chances of your stock losing or gaining 80% of its value in a day may seem impossible but in the crypto market, it happens in the blink of an eye.
It’s these huge gains that attract people. For example – when Bitcoin first launched in 2009 it was worth 9 cents.
By 2016, it rose to $900. Today, its estimated worth is over $60,000 per coin.
Imagine your slice of pizza turned into a house. That’s exactly what a single Bitcoin is worth today.
The rise in Bitcoin’s net value is due to global acceptance. With many countries and companies allowing Bitcoin as a valid form of payment, the value of Bitcoin shot up.
Another aspect is ‘Supply’ since Bitcoin was designed to allow only 21 million coins in circulation.
With big investors acquiring a major portion of Bitcoin, the demand for it only goes up in time.
The chances of fraud and forgery are minimal in Bitcoin transactions.
However, with that said, hackers are getting smarter every day. It’s necessary to stay extremely alert to ensure the safety of your crypto.
What are other popular Cryptos besides Bitcoin to invest in?
As of March 2022, there are over 18,000 cryptocurrencies in circulation.
A large portion of these cryptocurrencies is worthless as they serve no real-world purpose. But with a market of $2 trillion in the crypto-verse, surely there must be cryptos to make money.
Let’s take a look at the most popular cryptocurrencies –
The 2nd most popular crypto is Ethereum. Its popularity is largely due to Non-fungible tokens, popularly knowns as NFTs.
NFTs allow artists and creators to sell their designs and art over a digital platform. Ethereum is the preferred form of currency for most artists.
Apart from this, ETH is great for application, gaming, and a decentralized finance asset. A decentralized system allows you to move your money freely across countries and networks without coming under government jurisdiction.
XRP is popular in the crypto world that works on the Ripple system. It allows quick exchanges of money with a low transfer fee. The transfer fees are as low as $0.00013 per transaction.
Due to the low transfer fees, there are other micro currencies traded on the XRP ledger. The transactions are updated every 3-5 seconds on the Ripple network. Compared to Bitcoin, which may take minutes to even hours.
Ripple is accepted by a variety of financial institutions like – Yes Bank, Santander, Zip Remit, Axis Bank, Kotak Bank, Beetech, etc. to name a few.
The third-largest cryptocurrency based on market cap. Tether is directly tied to the U.S. dollar value. It means 1 Tether is generally worth $1 in value. However, in some scenarios, it changes from its intended value.
Tether was created to give investors a stable cryptocurrency that doesn’t fluctuate like most cryptos. Tether is a perfect way to own and trade in U.S. dollars by almost anyone worldwide.
Being a stable coin, Tether is often the best investment for a new investor as it isn’t subject to market fluctuations like other cryptos.
Binance Coin (BNB)
One of the world’s most popular crypto exchanges – Binance, launched their coin called Binance Coin (BNB).
BNB’s main uses are mostly found on its exchange platform, Binance. Traders receive several discounts and promotional offers that transact on its platform.
Off late, BNB has been used outside the platform as a form of payment. BNB has risen as a bankable crypto asset in various exchanges.
It’s used in loans, transfers, travel booking, gifting, lottery tickets, credit card payments, and a discount on Binance from transaction fees.
To increase the coin’s value, the Binance whitepaper mentions burning 20% of its profits to ensure there is a limited supply of BNB in the future. Thus, increasing its overall value and scarcity.
Now that you have an idea of how cryptocurrency works. Would you invest in them?
To ensure generating wealth in the crypto market, it’s critical to stay educated and follow news on your favorite crypto coins.
Keep following this space, to ensure that you have a world of knowledge in the crypto world.
We wish you the best of fortune in days to come!