HOW TO TRADE/INVEST IN CRYPTOCURRENCY

Crypto Beginners: Here Are Things You Should Know If You Are Planning To Invest

As of September 2017, there were over 1,100 cryptocurrencies and the total market capitalization of all cryptocurrencies reached an all-time high surpassing $60 billion! Then, by December 2017, the total market cap reached $600 billion (a multiple of 10 in only two moths).

Amazing right? Those are huge numbers. And regardless if you are aware or not, cryptocurrency is the word on everyone’s lips right now. So the question becomes…

What really is cryptocurrency? 

Is it good investment?

How to use cryptocurrency?

What is the best cryptocurrency to invest in?

These are questions I’d love to help you answer in this article. There is much to know about these digital currencies. It’s paramount to at the very least, gain a working understanding and what they are capable of before you delve into buying or investing in it. Here are few things you need to know about cryptocurrency.

Cryptocurrency Basics

Cryptocurrency is defined by Investopedia.com as a decentralized “digital or virtual currency that uses cryptography for security” making it difficult to counterfeit. Since it is not issued by a central authority, governments can’t take it away from you. 

Today cryptocurrencies have become a global phenomenon known to most people. Though still somehow alien and not understood by most people, banks, governments and many companies are aware of its importance. 

However, take away the noise and the press releases, a lot of people – even bankers, consultants, scientists, and developers – have a very limited knowledge about cryptocurrencies. They often fail to even understand the basic concepts.

So let‘s walk through the whole story.  

Where did cryptocurrency originate?

Few people know, but cryptocurrencies emerged as a side product of another invention. Satoshi Nakamoto, the unknown inventor of Bitcoin, the first and still most important cryptocurrency, never intended to invent a currency.

In his announcement of Bitcoin in late 2008, Satoshi said he developed “A Peer-to-Peer Electronic Cash System. “  

His goal was to invent something; many people failed to create before digital cash.

The single most important part of Satoshi‘s invention was that he found a way to build a decentralized digital cash system. In the nineties, there have been many attempts to create digital money, but they all failed.

After seeing all the centralized attempts fail, Satoshi tried to build digital cash system without a central entity. Like a Peer-to-Peer network for file sharing.

This decision became the birth of cryptocurrency. They are the missing piece Satoshi found to realize digital cash.

If you take away all the noise around cryptocurrencies and reduce it to a simple definition, you find it to be just limited entries in a database no one can change without fulfilling specific conditions. This may seem ordinary, but, believe it or not: this is exactly how you can define a currency. 

Take the money on your bank account: What is it more than entries in a database that can only be changed under specific conditions? You can even take physical coins and notes: What are they else than limited entries in a public physical database that can only be changed if you match the condition than you physically own the coins and notes? Money is all about a verified entry in some kind of database of accounts, balances, and transactions. 

Cryptocurrency is nothing but a digital asset designed to work as a medium of exchange that uses strong cryptography to secure financial transactions, control the creation of additional units, and verify the transfer of assets.

You can also say that Cryptocurrencies are digital gold. Sound money that is secure from political influence. Money that promises to preserve and increase its value over time. Cryptocurrencies are also a fast and comfortable means of payment with a worldwide scope, and they are private and anonymous enough to serve as a means of payment for black markets and any other outlawed economic activity.

But while cryptocurrencies are more used for payment, its use as a means of speculation and a store of value dwarfs the payment aspects. Cryptocurrencies gave birth to an incredibly dynamic, fast-growing market for investors and speculators.  

Their daily trade volume exceeds that of major European stock exchanges.

Basically, cryptocurrencies are entries about token in decentralized consensus-databases. They are called CRYPTOcurrencies because the consensus-keeping process is secured by strong cryptography. Cryptocurrencies are built on cryptography. They are not secured by people or by trust, but by math. It is more probable that an asteroid falls in Ajman, Sharjah, Dubai than that a bitcoin address is compromised. They are that secured. 

Is Cryptocurrency good investment?

Well, The Economic Times outlined five good reasons why you should go for cryptocurrency:

Fraud-proof: When cryptocurrency is created, all confirmed transactions are stored in a public ledger. All identities of coin owners are encrypted to ensure the legitimacy of record keeping. Because the currency is decentralized, you own it. Neither government nor bank has any control over it.

Identity Theft: The ledger ensures that all transactions between “digital wallets” can calculate an accurate balance. All transactions are checked to make sure that the coins used are owned by the current spender. This public ledger is also referred to as a “transaction blockchain”. Blockchain technology ensures secure digital transactions through encryption and “smart contracts” that make the entity virtually 'unhackable' and void of fraud. With security like this, blockchain technology is poised to impact nearly every segment of our lives.

Instant Settlement: Blockchain is the reason why cryptocurrency has any value. Ease of use is the reason why cryptocurrency is in high demand. All you need is a smart device, an internet connection and instantly you become your own bank making payments and money transfers.

Accessible: There are over two billion people with access to the Internet who don't have rights to use to traditional exchange systems. These individuals are clued-in for the cryptocurrency market.

You are the owner: There is no other electronic cash system in which your account is owned by you. 

How to Use Cryptocurrencies

According to Nostop.net, “The best way to describe Bitcoin and other crypto coins is that using them is fairly analogous to the way most people use their checking account’s debit card. Buying something with your debit card involves your bank withdrawing money from your account electronically and then transferring it to the company you just paid. Purchasing something with cryptocurrency is essentially the same, as you’re using electronic transfers via the internet through a specific digital currency’s network.

Does this mean it can be difficult to use Bitcoin or some other digital currency to buy goods and services? Sometimes. However, there are ways around this limitation – many major e-commerce sites support Bitcoin purchases, often in the electronics sector.”

What is the best Cryptocurrency to invest in? 

There has been so many speculations by so many people on this, most of who are not even experts or practitioners, everyone seem to be projecting their favoured particular cryptocurrency. There are so many easy ways to get up to speed on cryptocurrency and educate oneself. You just have to do the work.

Clearly, no one actually know how long this whole cryptocurrency thing will last but instead of steadily getting worked up and losing sleep at night constantly checking token prices which have zero fundamentals behind them. The truth is that many cryptocurrencies will die, and a lot will survive.

A cryptocurrency might be high today and then you wake up the next day to find it dead.

The market is very unstable and when you allow suggestions, everybody is marketing their own cryptocurrency everywhere, so you end up getting what many people use but not what might truly survive in the long term. So make your own decision by knowing what makes a cryptocurrency survive for long.

But how can you know? Right?

According to The Economic Times, “It's very simple just read its purpose and its supply and area cover by currency.”

The purpose of the cryptocurrency.

This is probably the most important factor to look at when deciding whether a cryptocurrency will survive into the future or not. Some cryptocurrencies, apart from acting as coins and trading assets, also provide platforms, serve as the fastest means to move money across the globe, try to solve a certain problem in society or in the cryptocurrency ecosystem, and do a lot more.

Market Supply.

The Market Capitalization of a cryptocurrency also, in a way, determines its long-term survival.

When you multiply a cryptocurrency’s current supply by its current price, you get the market cap of that cryptocurrency. So in general, the supply also has a significant impact on the market cap. These two go hand in hand to determine the number of cryptocurrencies left to be released and how that will translate into prices.

Conclusion

Paying for goods and services using crypto cash, both online and in person has the potential to revolutionize the way we use money on a day-to-day basis. Additionally, trading and investing in cryptocurrency can be lucrative and rewarding, providing the potential for high return on investment thanks to how insulated the digital currency market is.

However, using cryptocurrency in everyday transactions or investing and trading in cryptocurrency is not foolproof. It most of the time requires specialized knowledge to navigate the sometimes complex nature of the underlying technology, and crypto exchanges are subject to their own unique market conditions that may be too cryptic to the average greenhorn.

That notwithstanding, cryptocurrency is undergoing unbridled growth in both popularity and use. It won’t be long before major banking systems begin using adapted versions of blockchain technology to make electronic payments in fiat currency. Soon, even the most conservative financial advisors will begin recommending incorporating some crypto coin into your investment portfolio.

This is in no way saying there will no longer be place for physical money. Of course not. Clearly, cold, hard cash is always hard to beat, and in situations where there’s no access to technology, it’s still the best. However, the rules of the game are rapidly changing, and cryptocurrency obviously appears to be more than just a whim; rather, cryptocurrency is today shaping up to be a growing market that most likely is here for the long haul.