Cryptocurrency – Wharton expert, Sarah Hammer, delves into the fundamentals of digital currency, which has grown in popularity in recent years.
What is Cryptocurrency?
Cryptocurrency is a digital asset, to put it simply. The term comes from the fact that all of its transactions are highly encrypted, ensuring that the transactions are safe. Unlike traditional currencies, which are regulated and controlled by a central body, it is decentralized. A cryptocurrency’s supply is limited, and it is sometimes compared to precious metals such as gold and silver.
At its most basic level, Bitcoin is decentralized digital money that can be used over the internet. Bitcoin was the first cryptocurrency, launching in 2008, and it is still the most popular, influential, and well-known. Since then, Bitcoin and other cryptocurrencies such as Ethereum have gained in popularity as digital alternatives to government-issued money.
Bitcoin is created by mining, which is a process in which powerful computers solve extremely complicated tasks in exchange for a reward for completing successful cryptocurrency transactions. In other words, cryptocurrency exchanges frequently result in the introduction of new coinsinto the market.
Many cryptocurrencies use blockchain to manage and record transactions, which allows many entities to keep identical transaction records, making it a very secure system for your money.
“Investors who respect blockchain technology and have precise ideas on which aspects of it will become big in the coming years should invest in specific cryptocurrencies that are the foundation of those features,” said Swapnil Pawar, founder of ASQI Advisors.
The Cryptocurrency Market
As of May 2021, the cryptocurrency market is valued at $1.7 trillion. At the time of writing, there are over 16,000 cryptocurrencies listed, and the number is only going to grow. Bitcoin, with a market capitalization of approximately $650 billion, accounts for the largest share, followed by Ethereum and Tether.
Over the years, the acceptance of cryptocurrencies has been increasing around the world. For example, when Overstock.com, a major US online store, began accepting bitcoin in 2014, it generated $124,000 in bitcoin sales on its very first day. More interestingly, organizations are recognizing the potential of this digital commodity as an investment – Microstrategy Inc., based in the United States, bought over $1 billion in bitcoin in 2020!
- Bitcoin, Ethereum, Bitcoin Cash, and Litecoin are the most popular cryptocurrencies by market capitalization. Tezos, EOS, and ZCash are three other well-known cryptocurrencies. Some are similar to bitcoin. Others use alternative technologies or have additional features that enable them to do more than just transfer value.
- Crypto makes it possible to transfer value online without the need for a middleman such as a bank or payment processor, allowing value to be transferred globally, almost instantly, 24/7, for low fees.
- A government or other central authority typically does not issue or control cryptocurrency. They are in charge of a peer-to-peer network of computers running free, open-source software. Anyone who wishes to participate can usually do so.
- How is crypto secure if no bank or government is involved? It’s safe because all transactions are verified by blockchain technology.
- The balance sheet or ledger of cryptocurrency blockchain is comparable to that of a bank. Each currency has its own blockchain, which is a continuous, continuously re-verified record of all transactions made with that currency., Unlike a bank ledger, a crypto blockchain digital currency is shared by all members of the network.
- It is not controlled by any company, government, or third party, and anybody can join. A blockchain is a ground-breaking technology that has only recently been made possible by decades of computer science and mathematics breakthroughs.
What is the value of cryptocurrencies and how many are there?
There are now over 16,000 cryptocurrencies, according to CoinMarketCap. Their worth varies. Bitcoin has a market valuation of about $900 billion, making it the most valuable cryptocurrency. Ethereum, is the second most valuable cryptocurrency, with a market capitalization of less than $500 billion. Because, unlike public stock markets, there is no official data source, it is difficult to estimate the overall market capitalization of all cryptocurrencies. The overall amount of the cryptocurrency markets is estimated to be around $3 trillion by some estimations. Each cryptocurrency may have different technical features in addition to facilitating the movement of wealth.
What is it about cryptocurrencies that makes them so popular?
Cryptocurrencies enable parties to send and receive money over the internet without the need for a central counterparty, such as a bank. Cryptocurrencies also make it possible to send money over the world in real-time, 24 hours a day, seven days a week. Some claim that bitcoin is a preferable method of value transmission because it provides anonymity, security, and immutability (irreversibility) not found in traditional money.
How can I Buy Cryptocurrency?
A Cryptocurrency exchange, such as CTSKOLA, can be used to purchase cryptocurrency. To buy cryptocurrency, a person must first open an account, deposit money, and then place trade order (buy). If you want to invest in cryptocurrency, you can buy an ETF [exchange traded fund], a cryptocurrency-focused mutual fund, or the stock of a firm that focuses on cryptocurrency, such as Square.
Read Also – How to Buy Cryptocurrency on CTSKOLA
