Cryptocurrency has been one of the most popular investment opportunities in the past 10 years. The growth of online financial services resulted in new methods and new assets for investments. Cryptocurrency is one of them and let us see why.
Cryptocurrency is a digital asset, a virtual currency that can be traded and exchanged for goods. It is a kind of tokens that you can buy with real money and then buy actual things with them.
There is an endless variety of cryptocurrencies, but the main ones are Bitcoin, Ethereum and Ripple.
All these tokens use blockchain technology, which creates decentralised currency system that is not regulated by the government.
In simple terms, blockchain technology is a database. The way it works for Bitcoin, for instance, is that a new transaction is entered, and then the transaction is transmitted to a network of peer-to-peer computers across the world. These people would mine this type of data, so that Bitcoin transaction can go through. Then the network of computers solves the equations to confirm the validity of the transaction. Once confirmed to be legitimate, they are clustered into blocks, these blocks are then chained together creating a long history of all transactions that are permanent and then the transaction is complete. Since blockchain is a public ledger, you can access all of the data on the transactions on the day-to-day basis.
Bitcoin is the king of all cryptocurrencies, which emerged in 2009. It uses peer-to-peer technology without the use of other authorities or banks. Over the years, it has been demonstrating immense volatility. Started as a very little asset, it has dramatically exploded in value in the last few years. It reached the high of about $ 20,000 at the end of 2017 followed by a number of price drops, the biggest happened at the end of 2018. Since then, Bitcoin has recovered a lot but it remains extremely volatile.
The evolution and explosion of value for these coins is genuinely impressive. Cryptocoins gain real value only after they are being used. It is worth noting that cryptocurrency is an asset that is not backed by any commodity, it is more of a gambling or speculating that cannot count for real investment. This, however, does not mean that you cannot make a lot of money with it. Let us see what gains you may get by buying and selling cryptocurrencies.
Cryptocurrency cannot be duplicated, which means no one can counterfeit cryptocurrencies and this makes it safe. Cryptocurrency is a number that is associated with an address, not an actual file. Another thing that makes cryptocurrency impossible to fake is the blockchain technology. Blockchain is a list of all the transactions that happen, so everyone can see it and as a result, nothing is private. Another feature that makes cryptocurrencies safe is that there are a finite number of coins. Therefore, you cannot create more. The goal of cryptocurrencies is to aim for decentralised economy, meaning there is no need to rely on financial institutions. This is one of the reasons why cryptocurrencies gained so many fans. In addition, it is fully digital, so there is no need to physically hold cash or coins or gold etc. You get a wallet address, which presents a long series of numbers and letters. This is what you use to send the money. Your transaction is absolutely secure.
Cryptocurrency is used worldwide, you can trade 24/7 and you avoid inflation because the government cannot create more coins and therefore more supply.
In order to buy or sell cryptocurrencies, you can use a number of different exchanges. FintaTech, Coinbase, Bitfinex, Binance and Robinhood are the most commonly used platforms for this. FintaTech is an excellent platform for beginners due to its simplicity. This platform is available in web and app versions, meaning you can trade from both your computer and your phone. FintaTech is not just limited to crypto trading, it is a web and mobile software provider for faster product launch. It is easy to create an account, you will need to provide some personal information about yourself. You can use a debit or credit card to transfer money to your account. Once you come more technically savvy and want to trade between coins and perform more complex transactions, you can move between other exchange platforms.
The next step is to decide which cryptocurrency to buy. Here is list of the top 10 cryptocurrencies based on their market capitalisation.
1. Bitcoin (BTC) $1,063 bln
2. Ethereum (ETH) $212.2 bln
3. Binance Coin (BNB) $44.5 bln
4. Cardano (ADA) $37.2 bln
5. Tether (USDT) $37 bln
6. Polkadot (DOT) $35.5 bln
7. XRP (XRP) $21.2 bln
8. Uniswap (UNI) $16.4 bln
9. Litecoin (LTC) $13.6 bln
10. Chainlink (LINK) $12.6 bln
Bitcoin appears as the king of all cryptocurrencies. Ethereum, on the other hand, is more advanced than Bitcoin and has a lot of real world use. Ethereum is an open-source platform for decentralised applications. It is a whole network with its own internet browser, coding language and a payment system. It enables users to create decentralised applications on Ethereum’s blockchain. It is rather hard to know when to buy, as you cannot make a fundamental analysis like the one you would do with stocks or companies or assets. Prices can raise or drop any moment. For instance, with Bitcoin as the number of coins is limited and the amount of Bitcoin supply increased by only 2.5% in 2020, there is a high chance that the lack of supply will lead to higher prices. With the pandemic, more a more investors started to invest in cryptocurrencies. This resulted in doubling the price per Bitcoin from March 202 to June 2020 making it $ 10,000 per coin.
Before investing, take some time to study each coin to see if this is something, you want to invest in. Take your time to read white papers about the cryptocurrencies. It is hard to predict how the price would react in the future as the economy is heavily damaged right now. It is similar to the stock market – it is risky. As cryptocurrencies are extremely volatile, we would suggest that you only invest the money you can afford to risk.
FintaTech is a readymade platform that you can start using immediately. If you feel that there are additional features that you would like to add, we can create a custom online trading software for you based on your ideas and preferences. Contact us to get more information.