What Is Cryptocurrency? Here’s What You Should Know

Cryptocurrencies allow you to buy and sell goods and services for a profit. Here’s what cryptocurrency is, how to purchase it, and how to stay safe with it.

This article provides information and education for investors. Aanand Sharma does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks or securities.

What Is Cryptocurrency? Here’s What You Should Know

What’s Inside

1. What is cryptocurrency?

2. How many cryptocurrencies are there? What are they worth?

     Best cryptocurrencies by market capitalization

3. Why are cryptocurrencies are so popular?

4. Are cryptocurrencies a good investment?

5. How do I buy cryptocurrency?

6. Are cryptocurrencies legal?

7. How do I protect myself?

    Should you buy cryptocurrency?

    What online brokers offer cryptocurrencies?

Digital currency (or “crypto“) is a digital currency that can be used to purchase goods and services but uses an online ledger with strong cryptography to protect online transactions. Most of the interest in these currencies can be controlled by profitable trading, sometimes speculators push prices up.

Also, here are seven things you should ask yourself about cryptocurrency, and what you should be aware of.

1. What is cryptocurrency?

Firstly, want to say that a cryptocurrency is a payment method that can be exchanged online for goods and services. Many organizations have created their own funds, named tokens, which can be sold solely for a profit or a service rendered by the business. Think of them as you can play tokens or chip chips. To use the best or service, you will need to trade real money for digital currency.

Cryptocurrencies operate using a technology called the blockchain. Blockchain is a technology that has been transferred to distribution sites on many computers that handle and record transactions. The protection of this technology is one of its main appeals.

2. How many cryptocurrencies are there? What are they worth?

More than 6,700 different cryptocurrencies are publicly traded, according to CoinMarketCap.com, a market research website. And cryptocurrencies continue to proliferate, raising money through initial cash offers, or ICOs. The total value of all digital currencies on February 18, 2021, was more than $ 1.6 trillion, according to CoinMarketCap, and the total value of all bitcoins, the most popular digital currency, was estimated at about $ 969.6billion. (You can check the current purchase price of Bitcoin here.)

Best cryptocurrencies by market capitalization

According to CoinMarketCap, a cryptocurrency data and analytics provider, Also these are the top ten traded cryptocurrencies by market capitalization.

CryptocurrencyMarket Capitalization
Bitcoin$969.6 billion
Ethereum$222.3 billion
Tether$33.1 billion
Binance Coin$30.5 billion
Cardano$28.3 billion
Polkadot$28.1 billion
XRP$24.4 billion
Litecoin$15 billion
Chainlink$13.3 billion
Bitcoin Cash$13.1 billion

Data current as of Feb. 18, 2021. 

Also read the article Seven Steps to a Successful Target Group Analysis.

3. Why are cryptocurrencies so popular?

Cryptocurrencies are attractive to their supporters for a variety of reasons. Also here are some of the most popular:

  • Proponents look at cryptocurrencies like Bitcoin as a future currency and rush to buy them now, perhaps sooner than they become more valuable.
  • Various advocates like the fact that cryptocurrency removes major banks from managing the supply chain because over time these banks tend to lower their interest rates on inflation.
  • Several proponents choose cryptocurrencies, blockchain because it is a standard recording and recording system and can be much more secure than traditional payment systems.
  • A few speculators prefer cryptocurrencies because they go up in value and have no interest in long-term cash flow as a way to transfer money 

4. Are cryptocurrencies a good investment?

Cryptocurrencies may appreciate value, but many investors regard them as a gamble rather than a legitimate investment. The reason? Like real money, cryptocurrencies do not make money flow, so to win, someone has to pay that amount more than you did.

This is the investment concept’s so-called “great fool.”. A well-managed company, on the other hand, grows in value over time by increasing income and cash flow.

“Those who claim that cryptocurrencies like bitcoin will be the future currency should note that money’s going to be stabilized.”

Cryptocurrencies like Bitcoin, as the authors of Aanand Sharma have pointed out, may not be as stable, and some notable statements in the investment community have advised potential investors to avoid them. Warren Buffett, a well-known investor, compared bitcoin to paper research, saying, “It is a very easy way to move money and you can do it anonymously and all that.” A check can also be used to pass funds. Are the checks more expensive? Because they could transfer money? “

Those who claim that cryptocurrencies such as Bitcoin would be the future currency should be mindful that the form of currency must be stabilized for traders and investors to know what the asset’s fair value is. For most of their existence, Bitcoin and other cryptocurrencies have been insecure. For example, when Bitcoin traded at about $ 20,000 in December 2017, its value dropped to about $ 3,200 the following year. Somehow, in December 2020, it was trading at recording levels again.

These price fluctuations create a conundrum. If bitcoins can gain more in the future, people are less likely to use and circulate them today, making them less powerful than money. Why use bitcoin when it can cost three times as much as next year? 

5. How do I buy cryptocurrency?

While some cryptocurrencies, including Bitcoin, are available for purchase in US dollars, others require you to pay in bitcoins or another cryptocurrency.

Also, purchase cryptocurrencies, you will need a “wallet,” an online application that can hold your money. Usually, you create an account in exchange, and then you can transfer real money to buy cryptocurrencies like Bitcoin or Ethereum. Here’s more on how to invest in Bitcoin.

Coinbase is one of the most popular digital currency exchanges where you can create a wallet and buy and sell Bitcoin and other cryptocurrencies. Also, a growing number of online traders are offering cryptocurrencies, such as eToro, Tradestation and Sofi Active Investing. Robinhood offers free cryptocurrency trading (Robinhood Crypto is available in many, but not all, U.S. sources say. 

6. Are cryptocurrencies legal?

There is no doubt that they are legal in the United States, although China has banned their use, and ultimately whether they are legal depends on each country. And be sure to consider how you can protect yourself from fraudsters who see cryptocurrencies as an investment opportunity. Also always, pay attention to the buyer. 

Also Read the article What are the Benefits of Digital Business?

7. How do I protect myself?

If you want to buy cryptocurrency from ICO, read the fine print on company details for this information:

• Who owns the company? A well-known and well-known owner is a good sign.

• Are there any other major investors investing in it? It is a good sign when some well-known investors are looking for a piece of money.

• Will you have a share in the company or just money or tokens? This difference is significant. Having a token means that you are contributing to its income (owning it) while buying tokens simply means that you have the right to use them, like casino chips.

• Has the money been improved, or does the company want to raise money to improve it? Continuing the product, it becomes less risky.

Similarly, it can take a lot of work to comb through the prospectus; The more information you have, the better your chances of being legal. But being legal does not mean that money will be successful. That’s a completely different question, and that requires a lot of market knowledge.

But in addition to these concerns, having a cryptocurrency simply puts you at risk of theft, as hackers try to break into computer networks that store your assets. One top exchange announced the collapse in 2014 after hackers stole hundreds of millions of dollars in bitcoins. That is not a common risk of investing in stocks and bonds in major U.S. trade.

Should you buy cryptocurrency?

However, Cryptocurrency is a highly risky and unpredictable investment. Investing in existing companies’ stocks is usually safer than investing in cryptocurrencies including Bitcoin. 

What online brokers offer cryptocurrencies?

The following online brokerages and cryptocurrency exchanges that Aanand Sharma reviews currently have cryptocurrencies accessible.

Available for:
CoinbaseMore than 30 cryptocurrencies are available to buy and sell.
eToro Also Trading platform with 15 cryptocurrencies accessible.
ZerodhaBitcoin, Bitcoin Cash, and Ethereum are among the seven cryptocurrencies.
BinanceBitcoin, Ethereum, and Litecoin are the three cryptocurrencies used for trading.
TradeStationBitcoin, Bitcoin Cash, and Ethereum are among the five cryptocurrencies eligible for trading.
ZebpayBitcoin, Bitcoin Cash, Ethereum, and Litecoin are the four cryptocurrencies used for trading.

Disclosure: Similarly the time of publication, the author had no positions in the aforementioned securities.

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