Cryptocurrency World: A Comprehensive Analysis
Cryptocurrency is a subject that has been under intense consideration all over the world in this modern era. Many people are well-aware of the world of cryptocurrency who are getting into it more and more deeply and acquiring benefits day upon day. But there are still a lot of people, who do not have proper knowledge about cryptocurrency because of the lack of counseling. And no doubt, when someone usually mentions the term ‘cryptocurrency’ or ‘digital currency’, the first thing, mostly, comes to mind is Bitcoin-because of its popularity; But it is not the only one in the game, along with Bitcoin, there are many other cryptocurrencies in circulation today, like Ethereum, XRP, Litecoin, Bitcoin Cash, Dogecoin, and many more, who are getting more and more attraction of people because of their beneficial facts, especially of businessmen and investors. So, in order to understand that how cryptocurrency became so widely popular, it is necessary to have complete knowledge that what actually cryptocurrency is.
The word Cryptocurrency is comprised of two words ‘Crypto’ and ‘currency’. Crypto comes from a Greek word Kryptos-means hidden or secure. And the currency means money. So collectively, we can say that the meaning of a cryptocurrency is secured money or money in a secured network.
A cryptocurrency is a digital currency based on a ‘network’ linked with a large number of computers that manage and record transactions. In this network, the Cryptographic method is being used to ensure and secure the transactions. It is free of any physical tokens, coins, and bills. It is all online and uses digital files as money. And this network is not governed by a single person or any government or not even by any type of central authority. That is why, this is called decentralized, digital store value and medium at an exchange.
With that said, the owners of this currency do not need to pay fees and rely on banks or any trusted authorities in-between to run the transactions. You cannot buy or sell this currency through a bank or any third party. This is an electronic currency on a peer-to-peer network, you can either sell it to someone online who then sends fiat money to your bank account or sell it at a cryptocurrency exchange. It also provides users a facility to provide virtual payments to buy goods and services online.
Basically, cryptocurrency transactions are done through a blockchain network. Blockchain is a record-keeping technology that works behind the cryptocurrency network. This technology is designed as decentralized, and it is spread across a vast number of computers to make the transaction safer for everyone involved.
The concept of blockchain technology is taking as far complicated. But it is pretty simple; In this technology, data is stored in the form of blocks that are linked together and form a chain. In order to do a transaction, computers should have successfully solved a complex mathematical problem to put that transactional record in the block. If that problem is solved and the whole network agrees that this solution is correct, the block is added to the chain and shown to all others on the network. And never forget, it’s all done electronically in the form of digital files by the miners (specific nodes whose jobs are to confirm or verify the transaction regarding specific block in the blockchain by verifying hashes). In these blocks, data is stored permanently, and it is viewable for everyone. By that mean, all users have a kind of grip on this network, no single individual supervises the system. And that is why it is surely a secure network. In fact, this blockchain technology is a prominent part of the cryptocurrency industry which has been made cryptocurrency dominant worldwide.
In that regard to blockchain, Bitcoin was the first successful cryptocurrency, introduced in 2009, to use blockchain technology and now, it has been the most popular cryptocurrency among all others. So, before going further, why not have a brief look at the history of cryptocurrency.
Historical Background
Although Bitcoin was the first well-established cryptocurrency, when we talk about electronic currency, it relates us to the late 1980s, few efforts had done at creating digital currency with similar expectations as Bitcoin, but that was all in vain. Because they were unable to reach the level of popularity for various reasons.
Actually, the journey of these virtual currencies begins in 1983, an American cryptographer named David Chaum, firstly conceived cryptographic electronic money called E-cash. After 12 years, he processed it through a system called Digicash, to run the transactions confidentially, which required user software to withdraw notes from a bank as well as specific encrypted keys are required before it could send to the recipient. In 1998, Digicash failed to grow its userbase and had ended in bankruptcy. But it is being said that the ideas, concepts, and methods given by David Chaum, acted as the base for the foundation of digital currencies established afterward.
However, in 1998, Web Dai and Nick Szabo published their ideas about digital currency looking into the possibility of decentralization. Web Dai gave the concept of b-money and after that Nick Szabo created the Bit-Gold. But these currencies had not fully developed. Their purpose was to get rid of spending money on creating paper and physical coin money, but they failed to reach the level of success. But no doubt, their initial failures became the basic push to the first developed cryptocurrency known as Bitcoin in 2009.
Bitcoin
Well, the story of Bitcoin started in late 2008 when Satoshi Nakamoto (a person or a group of persons) published a white paper-Bitcoin. This was a peer-to-peer electronic cash system in which he introduced the blockchain network first time to the world. In early 2009, he launched bitcoin publicly by mining (the process through which new Bitcoins are made and transactions are confirmed on the blockchain) the first block of Bitcoin known as the Genesis Block of Bitcoin, as a reward, Nakamoto was given 50 Bitcoins for verifying the first transaction which was recorded officially, and network of Bitcoin had legitimized.
Its beginnings were not good because society did not trust this kind of new payment. Till late 2009, it had been only mined and had never traded before, however, Laszlo Hanyecz decided and purchased two Papa John’s pizzas by trading 10,000 bitcoins, for the first time in 2010. In today’s price, they would be worth more than $100 million. That’s why this day is celebrated annually and known as Bitcoins Pizza day.
Generally, Bitcoin’s market begins to frame from 2010 to 2014 in which Bitcoin faces many ups and downs in its market value and a lot of different events happened. Also, in this time zone, with the development of Bitcoin’s industry, many other cryptocurrencies alternative to Bitcoin had been launched. Like in 2011, the first altcoin cryptocurrency released was a Litecoin with a current market capitalization of approximately $14Billion; In 2013, Dogecoin was launched which has a market capitalization of $2Billion, currently. And after that time period; in 2015, a new cryptocurrency-Ethereum launched into the world of cryptocurrency, having the largest ‘following’ throughout the world of cryptocurrencies; with a market capitalization of approximately $210Billion, currently. And a lot more cryptocurrencies have been released to the world, with the passage of years, and now there is the existence of more than 4000 cryptocurrencies in 2021.
However, Bitcoin turned out to be more notable every year. But the rise in the price of Bitcoin was limited till late 2017; probably in December 2017, 1 BTC price had reached $20,000 from $1,000 which was an unbelievable turn point for Bitcoin’s Industry.
For a long time, people are being turned to cryptocurrencies especially Bitcoin and the world of cryptocurrency is becoming superior day by day. In 2020, the combined market capitalization of cryptocurrencies developed around 300% in which Bitcoin’s market cap constitutes a major part of overall market capitalization. In fact, in 2020, 66% of the total market cap of all cryptocurrencies is made up of Bitcoin’s market cap. And now for the first time in Feb 2021, Bitcoin’s market value reached $1Trillion, surges above $55,000 approximately. It is another high record made; the reason for this surge is Elon Musk who invested $1.5 billion in Bitcoin’s industry, recently.
Bitcoin is the most recognizable cryptocurrency among all others, and no doubt, it is the first cryptocurrency that explored the concept of digital currency worldwide. But today, there are more than 4000 cryptocurrencies in circulation, the alternative to Bitcoin; out of them few are very popular and attract people towards them as Bitcoin. These altcoins are giving more opportunities to people to get benefits by invest in them as compared to Bitcoin, nowadays; because Bitcoin’s price gets so high, and people do not have much money to buy Bitcoin. Therefore, before talking about the benefits and precautions of investment in cryptocurrencies, we should have deep awareness about the world of altcoins to get huge profits. Because people invest in cryptocurrency for only one reason-to make money. If we would not have the right information that what altcoin is more profitable for us according to the current circumstances, we couldn’t make ourselves wealthy.
So, in order to get the best guidance about altcoins; make yourself profited; you can get very useful information at the investor place about at least more than 25 most popular altcoin cryptocurrencies in circulation worldwide.
How can we own these cryptocurrencies?
A question that usually comes to mind of those who have basic knowledge about the word ‘cryptocurrency’ is-how can this crypto be acquired?
Well, before getting the answer to that question, you must have to decide first whether you want to get cryptocurrency by purchasing it or by mining it. Because there are two main ways to acquire crypto-briefly described below:
Mining
Basically, mining is the process by which you can earn cryptocurrency without putting money into it. In the world of cryptocurrency, the word ‘mining’ most commonly listens as Bitcoin mining, because Bitcoin is a well-developed example of mineable cryptocurrency among all cryptocurrencies. So, let’s take a basic concept about mining by looking into Bitcoin’s mining.
Well, in the Bitcoins industry-mining is the process that is being used for creating new Bitcoins by verification of transactions in the block to be added in blockchain public ledger, which is all done by miners.
Miners use very high-powered computers to solve complex mathematical problems which consume a very high amount of energy, to verify a transaction. If a transaction is got verify in the block and added to the blockchain, as a result, new Bitcoins are produced, miners are rewarded with these new Bitcoins.
Purchase or Trade Via Cryptocurrency Exchange
First of all, we should know that what the cryptocurrency exchange is.
Well, an exchange is a medium that provides you a facility to trade for and purchase or sell cryptocurrency through it. Some cryptocurrency exchanges permit you to buy crypto by utilizing fiat money, but others have usually given the option of trade for, only; you may already have some altcoins like BTC that you can exchange for others.
Some exchanges offer the facility of simply buying and selling a cryptocurrency and simply take a fee accordingly. But other exchanges especially peer-to-peer also offer the ability to put you in a contact with the one you are buying from, but it has a very poor reputation. Because on these types of exchanges there are more chances to be getting scammed.
The best exchange to buy or sell Bitcoin and all other alternative cryptocurrencies is Coinbase which is totally a secure platform and provides a lot of facilities.
Advantages of Cryptocurrency
As we have made a short outline in our minds, after getting through the brief information mentioned above-regarding the concept of cryptocurrency. Now, we can easily understand some potential advantages of cryptocurrency. Few are described below:
Secure because of Decentralization
The biggest benefit of cryptocurrency is, no doubt, decentralization (use of blockchain technology). In fact, this is the first and major thing in cryptocurrency which became the basic reason for its popularity. By this facility of blockchain, transactions are being verified by miners and records are viewable to both parties that are involved in the transaction. Transactional records or data are highly protected and permanently stored in a specific block in the blockchain. This blockchain encryption technique cannot be hacked easily and client’s data cannot be tampered with by hackers.
Peer-to-Peer payment method
The cryptocurrency provides peer-to-peer payment way to its users. The clients do not have a need to rely on banks or any third party to do transactions. Like, during any transaction, only two parties are involved: the receiver and sender. Users are not monitored by any central authority and they don’t have to take approval from any external source; that make clients very comfortable and confident in doing transaction.
Easy to Exchange Cryptocurrency
We can sell or buy cryptocurrency reliably via different cryptocurrency exchanges using different wallets. And we can purchase it by utilizing different types of fiat currencies like USD, Indian rupees, British pounds, European pounds, and many more.
Minimal Transaction Fees
As there is no third party involved in the cryptocurrency transaction system, the transaction fee is very low compared to banks and credit or debit cards.
Online Facility
Users can trade cryptocurrency through mobile phones or computers having internet access. As well as users can also buy products and services by online payments in cryptocurrency; they don’t have to travel to a store to buy the products.
Precautionary Tips before investing in cryptocurrency
Indeed, cryptocurrency is an investment opportunity that cannot be underestimated because of its beneficial facts. But wisdom requires that we should not get straight into it. Because the cryptocurrency industry is a market, and every type of market has some factors regarding ups and downs that come in the market that we should understand deeply before starting the crypto journey. And no doubt, cryptocurrency turned many into millionaires or billionaires but that doesn’t mean so that those people had invested their money in the crypto market one day, and the next day he got positive returns or millions in return. And a lot of people are there in the field who are getting huge losses as well, just because of lack of counseling. So, if you are the one who has decided to go into it and really don’t want to lose your money; here are some useful advises for you that you should act upon before investing in the crypto market; so, you can make big profits rather than huge losses.
Don’t Jump on Anyone’s Saying: Do Your Own Research!
Investing on the basis of just those friend’s or relative’s opinions who are making huge profits by cryptocurrency is the biggest problem nowadays. It could be possible to become a millionaire for you as well but without investigating everything on your own and just acting on someone’s advice is not a good way to go ahead. If you are thinking to invest in the crypto market-Something that you need to invest in, firstly, is your time to understand everything regarding the cryptocurrency market like what is blockchain, how many cryptocurrencies are in circulation, security policies, best mediums for exchange, about wallets, investment strategies, factors affecting the prices of crypto coins, ups and downs usually come in the market, risk factors and so on all the happenings in the crypto-sphere. You can get help by different means like Twitter, Google and by joining different WhatsApp and Facebook groups as well. And never forget that no research is enough-You need to keep yourself update consistently; because things change from time to time. The more you research the more you will be able to understand things properly; never invest in anything that you are unable to understand. And please make research your priority before taking any move, not in the crypto market only but at any stage in life.
Invest what you can lose easily
Another important thing that you need to be careful about is the amount of money that you are going to invest in the crypto market. Because investment in cryptocurrencies in an inappropriate manner can put you in financial problems.
Some investors invest all their money into it-end up losing millions in cryptocurrency, some people take big loans to invest in the crypto market and face losses at a higher level and there are many more multiple cases. However, you don’t need to be that kind of person at all, because it’s no wise to put all your savings and money into cryptocurrencies in the hurry of getting millions in the result. Because sometimes things go off the way and you may have to face unexpected financial losses.
Well, the better way to become successful in the world of cryptocurrency-Take a start with a very small investment that you can afford to lose and then see how it works; resulting will give you an idea that how should you have to take the next step. And remember-never invest an amount that you need to meet your regular needs. So that, if you lose your investment in case, your daily life will not be affected. Therefore, please start playing with a small amount in order to reduce the risks of losing money on a larger scale.
Is Bitcoin the only best opportunity for investment
When we talk about the crypto-sphere, Bitcoin is the most populous crypto-coin as well as has been the market leader since the beginning; that’s why, when people think about investing money in cryptocurrency, the first thing that usually comes in their mind is Bitcoin. But as the price of 1 Bitcoin reached above $55,000 recently due to the 1.5$ Billion investment of Elon Musk in Bitcoin-not every person can afford to buy it easily.
So, what does it mean that? Did those people who cannot afford Bitcoin, lost the chance to become a millionaire?
No, not at all; currently, there are many other alternative currencies in the crypto market such as Ripple (XRP), Ethereum, Litecoin, Dogecoin, and a lot more interesting currencies that are not as popular as Bitcoin but offering similar opportunities as Bitcoin. These are the Golden chances for those who haven’t as much money to invest in Bitcoin but want to become Billionaire by taking part in the world of cryptocurrency.
Be Smarter: Diversify your investment
One of the most beneficial strategies while investing money in cryptocurrency that every investor should implement is Diversification. In simple words, diversification means-never put all your eggs in one basket.
Let’s take an example: if you have 12 eggs and two baskets, you should not put all your eggs in one basket. Use a strategy of-putting 6 eggs in one basket and the other 6 in the second basket. So that, in case, if one basket would drop-down and eggs in that basket will have broken: you will still have your other 6 eggs in the other basket.
As same as the above example; as there are multiple cryptocurrencies available in the market with almost similar opportunities, so, you should not put all your money in one specific coin thinking that this specific coin is the ever-best coin! No, not at all, putting all your money in one crypto may cause financial problems; because ups and downs are going on in the cryptocurrency industry. And if you put all your money in one coin and the value of that coin will go down, you will end up losing all your money. So, be careful!
Last words
After jumping into the world of cryptocurrency, many people become millionaires overnight, and many are those who lost millions in the hope of getting billions in return. Therefore, it’s difficult to predict anything about results for anybody that what would happen after investment before getting into it practically.
However, we tried our best to provide you necessary information regarding the concept of cryptocurrency as well as basic tips about how to invest money in the crypto-sphere; expecting that you might be able to get huge profits in the crypto journey after getting this little help, lower down the risks of losing money.
Best of Luck!
