When was the last time you paid for something in cash? Shopping, groceries, and monthly debits are all primarily paid with credit or debit cards. As the world moves towards a cash-free model, cryptocurrency has been introduced. It is a digital currency that is an alternative form of payment secured by cryptography. It’s a peer-to-peer system that allows anyone anywhere to send and receive payments without relying on banks. All transactions are stored in an online database that is impossible to counterfeit or double-spend. To use cryptocurrencies, you need a cryptocurrency wallet, which can be software on a computer or mobile device, or a cloud-based service. These wallets confirm the user’s identity and link them to the crypto world.
There are different types of cryptocurrencies, such as Bitcoin, Ether, USD Coin, etc., that are prevalent in the crypto world. Bitcoin has generated its value of 14 million bitcoins in circulation, and seasoned investors are speculating on the future possibilities of this new technology, which has driven most of the market capitalization. The massive global investments in fintech companies, rapid surge in venture capital funding, and increasing market caps are the major factors for the cryptocurrency market. According to a recent report analysis by MarkNtel Advisors, The Global Cryptocurrency Market is projected to grow at a CAGR of more than 50% during the forecast period, i.e., 2022-27.
Basics of Buying or Selling Cryptocurrency
Traditional Brokers Vs Cryptocurrency Exchanges
You can choose the right platform between a traditional broker and a cryptocurrency exchange. Online brokers who provide ways to buy and sell cryptocurrency are traditional brokers. They offer lower trading costs but with fewer crypto features. Whereas cryptocurrency exchanges provide choices from choosing different types of cryptocurrencies, wallet storage, interest-bearing account options, and many more. The cost depends on the features chosen.
Look Before You Leap!
There are various types of cryptocurrencies in the crypto world allied with blockchain technology. Therefore, it is absolutely worth giving some thought to understanding coins that might be right for investments accordingly. Here are some basic tips for investing:
Make sure you understand the working mechanism, where it can be invested, and how to exchange it. Reading independent articles and webpages to interpret currencies such as bitcoin, ether, and USD coin helps to reduce risk and make an informed decision. Further, it is important to go through the annual reports of the crypto world, which helps to understand the investment case for each trade since there are thousands of crypto coins, and they all function differently.
Interpreting Market Fluctuations
The prices of cryptocurrencies are volatile, and they can drop or rise quickly. A seasoned investor can have a solid grasp of the market fundamentals, trends, and where it leads. But for a new investor without these skills and understanding of the encrypted algorithms, it can be a minefield.
Managing Risk
New traders should set aside a sum amount of trading investment to understand the parameters and use the remaining amount accordingly. Managing risk and realizing the process aids in mitigating the losses. Therefore, it is essential to keep some amount in reserve to have a bankroll in your trading.
Discussing Some Popular Types
Bitcoin (BTC)
Bitcoin was the world’s first cryptocurrency, dating back to its origin in 2008. Yet, it remains the best-known type of crypto. It is the first decentralized cryptocurrency with the largest market cap in January 2022, at US$896 billion.
Ether (ETH)
Ether is uncapped, which means that an unlimited number of coins can be theoretically created in the crypto world. It supports smart contracts and performs transactions when certain conditions are met.
Binance Coin (BNB)
Binance was the world’s largest cryptocurrency transaction in 2021. It reduced the transaction fees for users who pay through BNB. Thus, it provoked the adoption of Binance Coin and turned the tide. From then, its value remains the same as it destroyed the fixed percentage of transaction fees in circulation.
USD Coin
As the name suggests, the USD Coin is meant to create a fully digital dollar that doesn’t require a bank account or for the person to live in a particular country. Interestingly, the idea behind the USD Coin was to facilitate daily spending rather than investment purposes. It boasts a transparent spending process and better auditing.
Bottom Line
Cryptocurrencies have groundbreaking potential and allow for a global payment system that can be accessed anywhere and anytime, without the need for a credit card or bank account. As the world continues to progress, so does technology.
