Cryptocurrency: The Basics You Must Know Before Investing

The criptomoedas market increased from less than $200 billion in 2017 to almost $3 trillion in 2021, attracting a new wave of crypto traders.

But everything fell apart in the first half of 2022. The good part is that the crypto market is currently valued at around $900 billion. Still, we can’t deny that the risks for investors drawn to this growing investment market have become pretty apparent in recent months.

So, it’s more crucial than ever for investors to do their homework and understand what exactly they’re getting into. If you’re considering investing in cryptocurrencies, you must know  what cryptocurrency is. And how does it benefit you?

That’s why we have gathered all the facts that an investor needs to know about Cryptocurrency to make smart crypto investments. Let’s start!

A simple definition of Cryptocurrency:

It is a digital payment system. Cryptos don’t rely on banks to verify payments. It is a peer-to-peer payment system that allows anybody to send and receive money anywhere.

Cryptocurrency payments don’t work as physical money, carried around and transacted throughout the real world.

Instead, it is an online digital entry to a database outlining specific transactions. Transactions involving bitcoin funds are recorded in a public ledger. There are digital wallets to store the cryptocurrencies you invest in.

How does Cryptocurrency work?

Cryptocurrencies run on the blockchain. Let me clear it out now what blockchain is. It is mainly a distributed public ledger and a record of all transactions. It is the responsibility of the currency holders to maintain the blockchain and keep it updated.

Mining is a technique that uses computing power to solve complex mathematical problems to ganar criptomonedas. Mining is used to generate cryptocurrency units. Besides this, Users can purchase cryptocurrencies from brokers and use cryptographic wallets to store and spend them.

Now it’s time to reveal the uncertainty about cryptocurrency. You must remember that possessing cryptocurrency doesn’t mean owning anything tangible. Instead, it is a key that allows you to transfer a unit of measurement from one person to another without the help of a reliable third party.

Though Bitcoin was created in 2009, cryptocurrencies and blockchain technology applications are still evolving in economic terms. And finance experts predict that the popularity of cryptocurrency will increase more in the near future. The technology can benefit trading bonds, equities, and other financial assets.

Cryptocurrency examples:

Thousands of cryptocurrencies are there in the market at present. We are here to mention the most significant ones.

Bitcoin: Bitcoin, founded in 2009, was the first cryptocurrency and is now the most commonly traded. Satoshi Nakamoto created the currency. It is assumed that bitcoin is a pseudonym for an individual or group whose specific identity is unknown.

Ethereum: Ethereum, created in 2015, is a blockchain platform with its cryptocurrency known as Ether or Ethereum. After Bitcoin, it is the most widely used cryptocurrency.

Litecoin: It is similar to Bitcoin. But, it moves faster to build new connections, such as faster payments and procedures that allow multiple transactions.

Bottom Line:

There will always be a discussion on whether cryptocurrency is the future of money, but one thing is sure: you must only invest in cryptocurrency with thorough research. Good luck!

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