A cryptocurrency is a digital asset used as a trading medium online. It is made by advanced cryptography which makes it impossible to be duplicated or counterfeit. Cryptocurrency is based on a decentralized network of digital ledgers called blockchains.
Cryptocurrencies are used for online payments for different companies, goods, and services. These payments are made by virtual tokens which are digital representations of companies in the market e.g. Bitcoin as BTC.
How many Cryptocurrencies are there?
The first-ever cryptocurrency is Bitcoin. It was launched in 2009 by an individual or a group known as the pseudonym “Satoshi Nakamoto”.
Bitcoin is the alpha of cryptocurrency and also known as digital gold. But with time there have been many other successful cryptocurrencies such as Ethereum, Litecoin, and Cardano. These are called “Altcoins” in opposition to “Bitcoin”. There are currently more than 8900 cryptocurrencies in the market. And total market capitalization as of March 2021 is above $1.7 trillion according to coinmarketcap.com.
Pros and Cons of Cryptocurrency:
Pros:
Cryptocurrency makes payment easier among individuals and companies without the need for a third-party bank or credit card company. Crypto transactions are secured by public keys, private keys, and different systems such as proof of work and proof of stake.
Every user has a digital wallet that has a public key that is used to make transactions and a private key which is only known by the owner to confirm the transactions with minimal transnational/processing fee.
Cons:
Cryptocurrency can be used for illegal activities such as tax evasion, money laundering due to its semi-anonymous nature, However Bitcoin is a bad choice for such activities because it has helped officials in arresting many criminals.
Another drawback for cryptocurrency is that it doesn’t have any physical asset on the backend to maintain its value, therefore its market value is very volatile which makes it a questionable candidate for long-term investments.
Why is cryptocurrency feared?
Blockchain is the base technology of cryptocurrency which a chain of digital ledgers that monitor all the transactions, changes, and other activities happening with the cryptocurrency. Blockchain maintains data integrity and transparency by storing a copy of the ledger on each node on the trusted network.
However, because crypto is a virtual currency and does not have a central/physical database to store the information, and could be lost if the network system crashed or bears any physical damage. Also, there are no government or financial authorities involved, making it less protected from frauds and scams. And despite blockchains begin highly secure other parts of crypto technology such as trading exchanges and wallets are not immune to the cyber threat. Many exchanges have faced hacking resulting in the loss of millions of dollars.
The market price for cryptocurrency depends on supply and demand which can lead to price fluctuation. Bitcoin alone has faced some serious price surges and plunges since 2017.
Nonetheless, many people see the potential and advantages of cryptocurrency. It can be helpful against inflation due to its decentralized process of operation. Blockchain also provides easy and secure transactions of data which can be useful in the voting system and data transactions among government authorities.
Are cryptocurrencies legal?
Cryptocurrencies are completely legal in the US and many European countries. But China, Russia, and recently India are some exceptions that refrain from it. However, every country has its own rules and regulations regarding cryptocurrency so it is better to consult your state laws.
How Do I Make Money from Cryptocurrency?
Cryptocurrencies make money by peer-to-peer online trading via trusted exchanges. It can be purchased by fiat currency ( regular money ) or you can trade one currency with another. Money is made by selling at a profit and buying when the price is low.
Another method is mining the crypto from their platform. It is a long and costly process preferred by big investors.
Top 10 cryptocurrencies as of March 2021 according to coinmarketcap.com
How do I buy cryptocurrency?
Almost all the major cryptocurrencies can be purchased with the US dollar, some require crypto to crypto trading.
To buy cryptocurrencies you need a “digital wallet”, an online app that will hold your currency. To acquire a wallet you will need to create an account on an exchange, and then you can transfer money via credit card and buy some crypto such as Bitcoin and Ethereum,
Some of the famous exchanges are listed below.
To create a Binance account use referral code EUC27HZK or follow the link https://www.binance.com/en/register?ref=EUC27HZK and get up to 10% commission.
