What is cryptocurrency?
Cryptocurrencies have become famous all over the globe. The consistent rise in the price of most popular cryptocurrencies has brought them into the spotlight of mainstream media. Not just financial institutions but even normal retail investors are grappling to understand cryptocurrencies.
As cryptocurrencies are a new phenomenon, nobody exactly knows how to value them which is propelling their price higher. We would today shed some light on cryptocurrencies and help you better understand exactly what is cryptocurrency?
What are cryptocurrencies?
A cryptocurrency is a digital currency which is designed to provide a mode of transaction. The name crypto is derived from the fact that it uses cryptography in order to verify and secure the transactions. Cryptocurrencies generate a database of transactions which once verified conclude the transaction. This is the building block of the technology used by the cryptocurrency which is known as the blockchain.
1. Cryptocurrency trading:
Cryptocurrency trading is similar to Fiat currency trading. Cryptocurrency trading can be in pairs of Fiat currency and cryptocurrency or between 2 cryptocurrencies.
Trading in cryptocurrencies is one of the best ways to profit from the rising prices of cryptocurrencies.
Fun fact:
The price of Bitcoin which is a cryptocurrency has increased from less than $ 1000 in January 2017 to over $ 15,000 in December 2017.
As compared to forex trading, cryptocurrency trading is relatively simpler. You can also start trading in a shorter period of time. Some of the advantages of trading in cryptocurrencies include:
• Easy to start trading
• Smaller spreads
• Margin trading
Some of the exchanges which you can utilize in order to trade in cryptocurrencies include:
• Kraken
• Coinbase
• CEX.IO
Thus, in order to get your feet wet in the cryptocurrencies, trading is one of the simplest and easiest ways to do so.
2. Cryptocurrency:
The market cap of cryptocurrencies collectively is over $ 500 billion. Bitcoin alone has a market cap of over $ 200 billion. With more and more Initial Coin Offers being launched, the market cap of cryptocurrencies is increasing rapidly.
Cryptocurrencies like Bitcoin are entirely different from Fiat currency. Some of the properties of these cryptocurrencies include:
Irreversible transactions
A transaction in the cryptocurrency space cannot be reversed.
Wallet addresses
Cryptocurrencies can be sent and received with the help of wallet addresses. It is very difficult to find the actual owner of the wallet just by knowing the wallet address.
Global transactions
With the help of cryptocurrencies, the globalized transactions can be done in a shorter frame of time.
Secure transactions
Cryptocurrencies use cryptography in order to secure the information about the transaction. Also, only once the transactions are verified by a decentralized system known as the blockchain, the transaction is completed.
Controlled supply
Unlike the Fiat currencies where the governments, as well as authorities, can print more currency, most of the cryptocurrencies like Bitcoins are limited in supply. This increases the value of cryptocurrencies in the longer-term.
These are some of the unique properties of cryptocurrencies owing to which, they are gaining more and more popularity.
3. Is cryptocurrency Bitcoin?
The popularity of Bitcoin is such that most of the people consider Bitcoin to be the only cryptocurrency. The truth is that Bitcoin is the largest cryptocurrency by market cap. However, it is certainly not the only cryptocurrency. We would today share with you some information about the most popular cryptocurrencies including Bitcoin.
• Bitcoin:
Bitcoin is currently trading at $ 15,000 having risen from less than $ 1000, approximately 12 months ago.
The market cap of Bitcoin is over $ 200 billion.
Bitcoin was created in 2009 by an anonymous programmer with the pseudo name of Satoshi Nakamoto.
The aim of creating Bitcoin was to allow a peer to peer transaction.
The technology behind the working of Bitcoin is completely decentralized.
It does not have any centralized server neither it is controlled by a single authority.
This peer to peer approach is the reason that Bitcoin has become so famous.
• Ethereum:
Ethereum is an open source platform based on the blockchain technology which allows anyone to use the computation power from a wide variety of computers on the blockchain network. In exchange, the owners of the computers are able to earn a token by the name of Ether. Ether is the 2nd largest cryptocurrency currently by market cap. The market cap of Ether is around $70 billion currently. The main aim of this cryptocurrency is to provide decentralized computing resources to programmers as well as individuals to run their applications as well as software.
• Ripple:
Ripple is actually a platform which allows instantaneous transfer of money anywhere around the world. This protocol utilizes the XRP token which is the 3rd largest cryptocurrency. Currently, the market cap of XRP is around $ 50 billion. With the increasing use of Ripple protocol, the value of the token would also increase. Banks are increasingly adopting the protocol to initiate and conclude global transfers instantaneously.
These are the most popular and biggest cryptocurrencies currently. There are quite a few other cryptocurrencies which are increasing in popularity as well as market cap quite rapidly. These include:
• Bitcoin cash
• Litecoin
• IOTA
• Cardano
• And many more
Thus, Bitcoin is not the only cryptocurrency which is available currently. There are over 100 different cryptocurrencies which you can invest in or which you can trade in. Each and every month, there are multiple ICOs that is initial coin offerings which are being launched. Newer cryptocurrencies are constantly being introduced with the help of these ICOs.
4. Which Cryptocurrency is most used?
Bitcoin is currently the cryptocurrency which is most widely used. The number of online as well as off-line companies accepting payments in Bitcoins is increasing day by day. Some of these companies include:
• WordPress.com
• Overstock.com
• Subway
• Virgin Galactic
• Namecheap
• Expedia
• Wikipedia
• Whole foods
• Helen’s Pizza
• Bloomberg.com
• Euro Pacific
• Intuit
• Groove Shark
These are just some of the companies which are currently accepting Bitcoins in the off-line as well as online world. The entire list consists of more than 1000 different companies spread across different industries. Thus, you can gauge the popularity of Bitcoin from this very statistic.
Average daily trading volume of Bitcoin
The average daily trading volume of Bitcoin is over $ 5 billion. Thus, the cryptocurrency is actually pretty liquid across different exchanges.
Number of Bitcoins:
The number of Bitcoin’s which can be in existence is limited. The number is 21,000,000 coins. This limit is set by the creator of the Bitcoin himself. The limit is set to ensure that the value of Bitcoin is retained.
Bitcoin is one of the most used cryptocurrencies currently owing to the fact that it is also the 1st cryptocurrency which was created back in 2009. In the nearby future, no other cryptocurrency seems close enough to dislodge Bitcoin from this pedestal.
So, the next time around you hear about cryptocurrencies, you would not be faced with the question what is cryptocurrency? Hopefully, from our explanation above it would be clear to you that cryptocurrency is nothing but a digital currency which can be used to facilitate transactions.
Also, cryptocurrencies can be plenty but if you want to stick to the most popular one, you should definitely use Bitcoin in order to make sure that you are able to conduct online transactions quite easily.
Conclusion
This is a whole new and exciting trading world and is quickly taking its rightful place amongst traders worldwide. If this sounds interesting that’s because it is. It is also a very volatile marketplace where you can make very large profits very fast but it can also high risk.
So, if this is a market you want to get into and start trading than we highly recommend that you start educating yourself first, become very familiar with the different types of Alt currencies that are available, what is Cryptocurrency all about and how to trade it?
