The Cryptocurrency market explained
While most of us know about cryptocurrency, many still wonder what the hype is all about? Cryptocurrency or digital money involves no physical bills or coins. Ether and Bitcoin are the most popular cryptocurrencies. However, several new digital currencies continue to emerge in the cryptocurrency industry.
We can transfer digital currency online, in the absence of a third-party service, like a bank. Today, many people rely on cryptocurrency for making quick payments and avoiding expensive transaction charges.
You can also consider cryptocurrencies as future investments. In this post, we will offer a detailed overview of cryptocurrencies, highlighting the future trends related to digital currencies. First, let’s find out about the most popular ones.
The Most Popular Types of Cryptocurrency
If you want to buy cryptocurrency, you can purchase through a process called ‘mining’ or by using a credit card. The digital currency is stored in an online digital wallet or on other hardware.
Here are some popular industry crypto projects.
Bitcoin: At present, there are more than 18.5 million Bitcoin tokens in circulation.
Bitcoin Cash: Launched in 2017, Bitcoin Cash is incredibly popular. The main difference between Bitcoin and Bitcoin cash is its block size that is 8 MB.
Ethereum: You can consider Ethereum as an app store rather than a currency as it focuses more on decentralized applications or phone apps.
Ripple: The cryptocurrency is not blockchain-based and ranks as the third-most-popular cryptocurrency after Bitcoin and Ethereum.
Litecoin: Created in 2011 by a former Google employee, Charlie Lee, LiteCoin differentiates itself from Bitcoin by employing a different mining algorithm to process faster transactions.
Stellar: Focuses more on faster and more efficient money transfers, even across national borders. Jed McCaleb, the co-founder of Ripple, founded this currency in 2014.
NEO: Developed in China, NEO was formerly famous as Antshares. The currency’s primary focus is on smart or digital contracts, which allow users to execute and create agreements without any mediator.
Cardano: Cardano or ADA sends and receives digital funds and claims to offer a more sustainable ecosystem for cryptocurrencies.
IOTS: Introduced in 2016, the Internet of Things Application works, unlike most other blockchain technologies. The currency works with smart devices on the IoT or the Internet of Things.
Why are Cryptocurrencies so Popular?
Cryptocurrencies show massive potential for revolutionizing online transfers. All types of cryptocurrencies guarantee easier transfer of funds between two parties, without any third-party service like a credit card company or a bank. Instead, public and private keys, along with different types of incentive systems, secure these transfers.
A user’s account address or ‘wallet’ has a public key in modern cryptocurrency systems, whereas the private key is only for the owner to sign transactions. Every fund transfer process requires minimal process fees, which benefits users who want to avoid the steep fees charged by financial institutions and banks for wire transfers.
Here are some reasons why cryptocurrencies are becoming increasingly popular.
- Supporters consider cryptocurrencies such as Bitcoin as the currency of the future. For that reason, more and more people are buying bitcoins before their value increases.
- Blockchain, the technology behind cryptocurrencies, is a decentralized processing and recording system. It makes cryptocurrency more secure than conventional payment systems.
- When you invest money in cryptocurrency, the investment works the same way you exchange your money in a new country.
- Cryptocurrencies are becoming more popular because their value is increasing over time.
- Cryptocurrencies have no connection with world governments, which means it has the potential to remain stable in case there is turmoil in any country.
- The process of trading cryptocurrency is easy and quick.
- More than six thousand different cryptocurrencies are traded publicly. As other cryptocurrencies continue to emerge, all cryptocurrencies' total value is now more than $1.6 trillion.
Risks of Trading Cryptocurrencies
When you are thinking about using cryptocurrency for making a payment, make sure you know the critical differences between paying with traditional methods and paying with cryptocurrency. That’s because cryptocurrencies do not provide the same security or legal protections as regular currencies.
No government insures cryptocurrencies, which means that cryptocurrency stored online will not receive the same protection protocols as your money in a bank account.
If, unfortunately, hackers or online thieves can access your digital wallet or your company goes out of business, you will not get any help from the government. In addition to that, a cryptocurrency’s value changes continuously. That means your investment can be worth thousands of dollars on one day but merely hundreds on the next.
Not all cryptocurrencies or companies that promote cryptocurrency are the same. Don’t forget to check the claims of a cryptocurrency trading platform that promises larger-than-life profits.
In addition to that, cryptocurrency payments are irreversible, which means once you pay using cryptocurrency, you can’t get a refund unless the seller sends it back. Hence, whenever you are trading with cryptocurrencies, make sure you know about a seller’s location and contact the seller if you want to ask questions.
How do I Buy Cryptocurrency?
You can purchase some cryptocurrencies, like Bitcoin, through U.S. dollars, while other types of cryptocurrencies require you to pay through another cryptocurrency or bitcoins. If you want any cryptocurrency, you will need a ‘wallet’ or an online app to hold your currency. Typically, buyers create an account on an exchange and use real money to buy Ethereum or Bitcoins.
Tips to Invest in Cryptocurrency Safely
Technology continues to revolutionize the way we work, communicate, and trade goods. Consumers and companies don’t prefer cash anymore, so contactless payment methods like digital money transfers are becoming more popular.
Bitcoin was the first cryptocurrency to go mainstream. However, other types of cryptocurrencies are also gaining popularity. Today, there are more than two thousand different cryptocurrencies.
Built using blockchain technology, cryptocurrencies are now safe, quick, and easy to invest in. Blockchain refers to the way transactions are recorded into "blocks" and time-stamped. While the procedure is complicated, the outcome is safer transactions that are hard for hackers to tamper with and access your payment information.
Although investments are risky, some experts believe that digital currencies are now the hottest commodities. Here are some tips to help you if you want to invest in cryptocurrencies.
Find out about different cryptocurrency exchanges before you invest in a single dollar. Hundreds of online exchanges provide the means and resources to digital trade currencies. Before you choose an exchange, read reviews, and discuss with seasoned investors to get an insight.
Explore your Storage Options
When you buy any cryptocurrency, you have to store it. One way is to store it in a digital wallet or on an exchange. Many kinds of different wallets come with their benefits and risks with specific technical requirements. Make sure you investigate your storage options before investing.
Diversify Your Investments
Diversification is the secret behind a successful investment strategy. That holds for cryptocurrency too. Never invest all your money in a single type of cryptocurrency. For example, don’t put all of your funds in Bitcoins just because that’s the most popular cryptocurrency. Choose from thousands of options and include several currencies in your investment portfolio.
Since the cryptocurrency market can be volatile, investors must be ready for any ups and downs. You may witness drastic changes in prices. If you think you can’t handle any dramatic swings, avoid investing considerable amounts in cryptocurrencies.
Since cryptocurrency is still in its infancy, there is always something new that investors find out about digital currency. Be prepared to face many challenges or risks whenever you want to make investments in the world of cryptocurrencies.
Benefits of Using Cryptocurrency in E-Commerce
E-commerce and cryptocurrency complement each other because both appeal to today’s tech-savvy users.
Here are some benefits of using cryptocurrencies in E-Commerce
Online retailers can access a whole new segment of tech-savvy consumers by introducing cryptocurrency as a payment method. When customers can pay through a digital wallet, they are likely to make more purchases, thereby increasing their profits.
Consumers who frequently use their credit cards to buy products benefit from a safe and speedy transaction process through cryptocurrencies. That means retailers can streamline their businesses' cash flow and maintain a steady stream of profits.
When online retailers offer cryptocurrency as a payment method, they enjoy a reduced fee for every transaction. The amount of this fee depends on whether you store cryptocurrency in your digital wallet or through a third-party provider but will still be significantly less than the amount you would have to pay credit card providers or services like PayPal.
Once you complete a cryptocurrency transaction, the transfer is irreversible unless you have the merchant’s consent. Hence, retailers have more protection when it comes to fraudulent activities because no bank or third-party payment system is involved.
Now you know why cryptocurrencies are becoming popular for online retailers, consumers, and investors. Don’t forget to check out more ideas and information on making profitable investments in the cryptocurrency world.