A Comprehensive Guide About Cryptocurrencies

Cryptocurrencies are all the rage right now. As prices fluctuate and new coins emerge, investors are trying to decide whether this is the right time to get into crypto. So, what’s the verdict? Is it worth your investment? Here’s a closer look at cryptocurrencies and why you might want to consider investing in them.

We all know that feeling. You’ve been patiently waiting to invest in that new cryptocurrency that everyone is talking about, but you just can’t seem to pull the trigger. Maybe you’re worried about a bubble. Maybe you’re waiting for the right time. But what if that time never comes? In this post, we’ll take a look at whether or not now is the right time to invest in cryptocurrencies, and help you make up your mind.

• Table of Contents

  Toggle

  What are cryptocurrencies and what is the difference between them?

Cryptocurrencies are digital currencies that are encrypted and secured by cryptographic systems making them impossible to be forged. Most cryptocurrencies are decentralized, which means they are unregulated by any central authority and spread across Hence, are not controlled by the government or any central authorities. Cryptocurrencies are distributed across many computers and enable secure online payments without the interference of any third party.

Cryptographic methods and encryption algorithms protect entries, such as hashing functions, and elliptical curve encryption among others are known Crypto. Blockchain technology is an emerging and decentralized technology that has the potential to change everything in our digital world. They are ideal for keeping anything that changes over time for instance financial transactions.

Sounds good, right? Let’s proceed to the different types of cryptocurrencies.

• Types of cryptocurrencies.

According to CoinMarketCap.com, more than 15,000 different cryptocurrencies are traded, and the figure keeps increasing! As of mid-December 2021, the total value of all cryptocurrencies was about $2.1 trillion!

The most popular digital cryptocurrency bitcoin has a total value of $868.7 billion.

Ready to invest? below are some of the topmost popular cryptocurrencies.

1). Bitcoin(BTC).

Bitcoin is one of the oldest and most known cryptocurrencies. it was created in 2009 and it’s open-source software. Bitcoin makes safe peer-to-peer transactions using Blockchain technology, during transactions all users can view it and they are encrypted by the algorithm in Blockchain.

2). Ethereum( ETH).

Ethereum is an open-source network that was created in 2015 and is also based on Blockchain technology like bitcoin. This cryptocurrency is used by application developers to pay for transactions carried out on the Ethereum network, Ethereum network runs the programming code of a decentralized application.

3). Litecoin (LTC).

Litecoin an alternative to bitcoin was launched in 2011, and just like other cryptocurrencies Litecoin is decentralized and it is open-sourced. While the algorithm of bitcoin operates at “SHA-256, Litecoin is “script.

4). Bitcoin Cash (BTC).

This cryptocurrency is more of an advancement of bitcoin, it was created to improve certain features of bitcoin.

5). Ethereum Classic (ETC)

This is a version of Ethereum, on a decentralized similar platform it runs a smart contract. Ethereum Classic pays users for products and services with a valuable token known as “classic ether”

6. Binance Coin (BNB)

This cryptocurrency operates as a payment method for fees incurred during operations on the Binance Exchange. It’s more of a utility currency and according to market capitalization, it is the third-largest cryptocurrency.

Now, know some types of cryptocurrencies, and read more about cryptocurrencies on Investopedia.

let’s proceed to reasons you could invest in cryptocurrency.

• Reasons to invest in cryptocurrency.

1. High Cash Flow.

The liquidity of cryptocurrencies has been generated steadily over the years, the market stats of the crypto market are very promising and have been delivering good results consistently.

The leading cryptocurrency, Bitcoin has been around since 2009, it’s the most popular cryptocurrency and its price has increased by over 1000% in the last year alone. Plus, you can buy anything with cryptocurrencies, sounds good, right?

2. Decentralized.

Another reason to invest in Cryptocurrencies is they are not tied to any country or government, they are decentralized and are distributed across a group of connected networks, which helps in optimizing resource allocation.

Cryptocurrencies give full rights to the users to all their transactions; they are independent, and no external element can control your trading and transactions

3. Easy Movement

Cryptocurrency allows you to move money anywhere in the world where any suspicion or physical note/currency. Most countries of the world are adopting it as means of exchange which movement across the globe.

4. Long-term investment.

Another reason to invest in cryptocurrency is that it’s a good long-term investment. Yes, there are times when the market fluctuates, and cryptocurrencies have a lot of risks attached to them. However, investing in cryptocurrency can be beneficial in the future. Investing in cryptocurrency can be some sort of financial backup when financial crises set in or you could view it as retirement saving.

5. Allows Independent trading.

By investing in crypto trading, you’ll have access to 24/7 trading, which is flexible, allowing traders to perform their trading any time of the day.

The reasons why you could invest in cryptocurrency are immensely valid, besides the world is evolving with technology and you should move along, right?

• How to invest in cryptocurrencies – how can you buy, store, and sell them?

Are you finally ready to take a ride into the world of cryptocurrencies? it might still seem unclear, but with a bit of research, you should be buying, storing, and selling cryptocurrencies in no time. How to invest in cryptocurrencies, let’s go!

1) Set up your account.

To buy, trade, and sell cryptocurrencies you’ll need to set up your account. Create an exchange account, that you’ll use to store in your digital &wallet& the cryptocurrency.

However, you’ll simply be needing a brokerage account to trade cryptocurrency. Rather than accessing the underlying exchange yourself, the broker exposes it for you. This process is usually much easier to set up.

2). Decide on which cryptocurrency you’ll buy, trade, or sell.

It would be difficult to trade all the different cryptocurrencies in the world. Hence, you should choose among the major cryptocurrencies such as bitcoin, Ethereum, Litecoin, and bitcoin cash among others.

Due to the availability of so many currencies, we’d advise that you select those you have an idea about, learn the rudiments, and become an expert in their price fluctuations rather than concentrating on all the currencies.

3). Select a trading strategy.

You never can learn everything about cryptocurrencies; however, you need to have the knowledge and understanding of the market to be successful due to the involvement of more people in the crypto market, over the years prices have been influenced by affluence over US Dollar, government regulations, influential businesspeople among others.

4) Implement your strategy.

After deciding on a trading strategy, you’ll have to implement it. You will have to clearly state the point you’ll close a trade. cryptocurrencies changes, they are volatile, hence, operating in a large open position can be dangerous.

You are required to close a position once it reaches the target or the end loss. We’d advise you to start small by testing your acquired knowledge of cryptocurrencies on a practice account. That way you’d feel how the markets work and the factors affecting them.

You can read more on how to invest in cryptocurrency from investor junkie

 

Here are some of the advantages and disadvantages of cryptocurrencies you need to know.

Advantages.

Over the years, the value of cryptocurrencies has been generating greatly and the returns from the investments in cryptocurrency can help generate profit. At some point, the value was almost $2 trillion. As of December 2021, the value of Bitcoin in the crypto market was more than $862 billion.

 

Cryptocurrency transfers are carried out fast and within a short period compared to normal money transfers. That’s because they do not make use of any third-party intermediaries.

 

Cryptocurrencies are been used as a source of remittance, and payment for goods & services.

 

Cryptocurrencies don’t require any bank or money agent involvement when transacting, they can carry out a transaction between two parties.

Disadvantages.

Cryptocurrencies are now used by criminals to conduct crimes. For instance, money laundering and criminal syndicate are using it to transact unlawfully earning and terror funding

 

cryptocurrencies are pseudonymous, leaving tracks for government officials to track down financial transactions even though they say it’s anonymous.

 

Price instability occurs in cryptocurrencies traded in public markets. They are considered to be short-fed by economists.

 

One major downside of cryptocurrencies is the mining operation which is not environmentally friendly as it consumed power and contributes immensely to climate change.

 

it is impossible to say what will happen in the coming years, but Cryptocurrency is surely a good investment and it’s extremely profitable.

 

You can get more on what investors should do during crypto crashes from bankrate.

 

• Cryptocurrency scams- what to watch out for if you’re thinking about investing your money.

There are four popular cryptocurrency scams, which include;

1. Exit scam.

This form of cryptocurrency scam, where scammers pretend to initiate a new form of cryptocurrency. After a while, they vanish with investors’ funds.

2. Cryptocurrency cloud mining scam.

Cryptocurrencies can be formed through mining; this involves the use of computers to find solutions to complex mathematical problems. However, some scammers now set up cloud mining software platforms and apps that steal cryptocurrency from crypto miners.

3. Phishing cryptocurrency scams.

These scams involve criminals sending emails to people randomly, offering juicy crypto deals and opportunities. They normally vanish once payment is made.

4. Celebrity endorsement cryptocurrency scams.

These scams involve criminals using photos of celebrities and public figures to promote their fraudulent cryptocurrency schemes.

We are all at risk of scammers, so we should watch out for the following before investing our money.

1. Take your time and find out more information before investing your money.
2. If it’s too good to be true, conduct your research before investing.
3. Avoid social media adverts that look suspicious.
4. protect your wallet and apply other security measures.

• The future of cryptocurrency – where do we go from here now that bitcoin has reached its all-time high?

Cryptocurrency has been evolving, and the world has been trying to develop terms and laws that would make cryptocurrency safe for investors.

It might be difficult to predict where cryptocurrency might be in the coming years, however, financial experts all over the world are striving to make laws and stabilize the market and help people make sense of it. Plus, economic experts predict that crypto might become institutional money.

• Conclusion.

Cryptocurrency is fast revolving around the world, yes! and in a few years might become the institutional money of the digital world. The value of cryptocurrencies keeps skyrocketing, if you don’t invest in crypto now you might regret it.