Today we want to share a great beginner’s guide to cryptocurrencies. One of the benefits of using a cryptocurrency is the fact that you can borrow, sell, buy or lend without the need to worry about your credit score. You won’t even have to worry about your identity because you can make anonymous transactions using these despite the fact that many people are still sceptical about investing in Bitcoin, which is the world’s first-ever cryptocurrency, news about it being capable of getting mind-boggling returns shocked even the most reluctant institutional investors. This is just one of the many reasons why cryptocurrencies continue to evolve and capture the hearts of investors and finance gurus around the globe.
Cryptocurrency: Understanding the Basics
Bitcoin is a cryptocurrency, and yes, you probably already know about this fact. And since it is a cryptocurrency, it means it does not have a physical form. (Another known fact, right?). Now, let’s delve into the topic a bit deeper.
When we say cryptocurrency or crypto-currency, we are referring to digital currency produced from a collection of binary data. Binary data here would mean the 1’s and 0’s that have been specifically designed for use as a medium of exchange. And, just like dollar bills, all these have serial numbers for verification and record-keeping. You can even divide a cryptocurrency into bits like you would a dollar bill into pennies.
A Glimpse on How Investing Cryptocurrency Can Benefit You
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How does cryptocurrency boost profits? So, let’s cut to the chase. Many people have accumulated wealth from investing in cryptocurrencies. This is because the value of a cryptocurrency also fluctuates much like a stock. For example, in 2010, the worth of one Bitcoin was only a few pennies, but today you will find that per coin may have a value of around $60,000.
Why the increase in value? Well, you probably have learned from basic economics that as the supply decreases, the value of a product will most likely go on an upward trend as well. The birth of Bitcoin as the world’s first-ever cryptocurrency also paved the way for the emergence of other types of cryptocurrency. Not to mention the growth among the crypto traders population, including those who trade on the Bitcoin Pro App. Each of these was created for different uses, intentions, and forms.
Main types of cryptocurrencies according to market cap
Bitcoin (BTC)
Bitcoin first came out into the world in 2009. Its birth has been largely credited to Satoshi Nakamoto, whose goal was to produce an electronic cash system that functions while remaining completely decentralised. When we say “decentralised”, it would mean there is no specific institution, bank, or government that will control its release and production. Bitcoin owners remain anonymous. They do not need to have tax identification or social security numbers. Instead, those who buy Bitcoin will gain access to sellers and buyers through the use of encryption keys.
This digital currency is mined with the use of super-powerful computers that are linked to the internet, rather than being issued from a central bank as traditional money does. After cultivating the Bitcoin technology, history has it that Nakamoto passed the source code to other individuals within the bitcoin community.
Ethereum (ETH)
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It is so easy to look at Ethereum as something that’s similar to Bitcoin. This is true in the sense that Ethereum is also a digital currency. However, Ethereum has way more capabilities compared to Bitcoin. Ethereum is capable of making transactions using smart contracts, thus making it a highly programmable digital cryptocurrency. With Ethereum, people can purchase properties such as a home. Ethereum will then be used as payment but only when certain conditions are met. There is no need for escrow agents, lawyers, and other third parties in order for a purchase transaction to be successful. A piece of code is all it takes for homeownership to be transferred from the seller to the buyer.
Binance (BNB)
When you combine the two words bitcoin and finance, what you’ll get is the word “Binance”. Binance coin is a cryptocurrency released by Binance exchange company and is currently traded using the BNB symbol. Binance was founded by Zhao Changpeng, who is on Forbes’ list for the richest people in the cryptocurrency world.
Zhao is currently valued at $1.9 billion and is now among the most influential in the crypto industry. Binance is a cryptocurrency designed for use in trading cryptocurrencies. This goes to say that for you to start trading, you must own another cryptocurrency first. Binance allows trading with many other types of cryptocurrencies, including bitcoin, Litecoin, and Ethereum, among others.
Cardano (ADA)
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First and foremost, to avoid confusion, let’s clarify these two terms first – The word “Cardano” refers to the blockchain while the symbol ADA refers to its cryptocurrency. The ADA cryptocurrency is somewhat similar to ethereum as it also allows the creation of smart contracts.
Cardano is traded using the symbol ADA. Cardano was launched into the cryptocurrency world last 2017 with the aim of providing solutions to issues that other cryptocurrencies are having in terms of sustainability, scalability and operability. The Cardano cryptocurrency can also be used for sending and receiving funds in an instant, with only minimal fees. This makes it a very useful cryptocurrency in many financial and business industries since it is designed with “regulations” in mind.
Ripple (XRP)
Ripple functions both as a cryptocurrency and a digital network where people can process financial transactions. The XRP blockchain is engineered by David Schwartz, Jed McCaleb, and Arthur Britto. You can use XRP as digital money for exchange with other cryptocurrencies. You can also use it for investment and for financial transactions within the Ripple network.
Ripple was designed with the aim of replacing SWIFT, which is the world’s leading money transfer network. One of the advantages of XRP is faster transaction settlements. With Ripple, it only takes up to five seconds for transactions to be confirmed. On the contrary, a bank wire transfer takes days for it to be settled, while Bitcoin transactions will take hours before it finally passes the verification process.
At present, we can no longer ask whether these cryptocurrencies will survive. This is because apparently, the technology being used to make this digital money up and running despite hurdles in regulation and centralization continues to evolve.
Different countries around the world have varying perceptions regarding the possibility of cryptocurrencies achieving an established set of regulations. So, if you’re among the many who are looking to invest in it, always take into consideration all the risks associated with investing in cryptocurrencies.
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