Cryptocurrency is a medium of exchange that uses digital transactions to send and receive money. It can be used for more than just currency, as it is also considered the newest form of payment system in the world. In this article, we will learn about cryptocurrency basics about how it works. If you are still not sure why crypto is popular, here you go.
What Is Crypto?
In simplest terms, cryptocurrencies are digital currencies that are created using cryptographic protocols to control transactions. These virtual currencies have different characteristics and value, which makes them unique from fiat currencies such as coins and stocks. Some examples of cryptos include bitcoin, ethereum, litecoin, etc.
History Of Bitcoin And Why Should We Care About Its Future With Blockchain Technology?
Bitcoin was developed by an anonymous person or group via “cryptography”—a public ledger system maintained by network nodes that keep track of who has sent or received the cryptocurrency. It became very famous back in 2009 when its price began at $17 per coin (roughly 17.1 million USD). In 2016, it reached $38,000 per coin (rough 6.6 billion USD). Since then, the price of bitcoin has been fluctuating. By December 2021, it had hit its all-time high of almost $68,000. Before reaching this level, it traded between $6,000 and $6,500.
Cryptocurrencies use cryptography to conduct peer-to-peer networks. Each transaction is recorded in a publicly available data ledger called blockchain. Every computer in a blockchain network must verify every transaction and sign any information with their wallets. This process keeps the record of each transaction and prevents double spending. Because of these features, bitcoin has become the first cryptocurrency and decentralized payment system ever. A new generation of people are getting involved with cryptocurrencies; now everyone pays attention to them because they are worth something and have intrinsic value. However, there is no guarantee that such cryptos will exist and so it is extremely important to stay informed about these projects.
Why Are People Investing In Crypto?
Although most of us already know what cryptocurrency is, few may know why people are investing in it. The truth is, today, people don’t have access to credit cards and banks, but there are online brokers and exchanges where you can store your funds safely. You may buy and sell digital assets and cryptocurrencies easily through platforms like Robinhood, Coinbase, Gemini, Nexo, Bitbank, DigiFinex, Compound, Binance, KuCoin, etc.
They charge you a certain amount of commission for each trade. For example, if you deposit some amount into one of those trading accounts, the platform charges you a commission on top of it. Another way to increase your investments is by buying individual tokens from marketplaces and giving liquidity to them in a form of capital or lending them out to others based on interest rates or other factors. Some platforms even allow you to invest without paying fees and then withdraw your profit back into your account. That way you can earn passive income while investing.
What Will Be The Price Of Crypto In 2022?
The future price of cryptos is unpredictable for everyone but it is predicted that the prices will go up and down. As of 2019, the average annual rate of return of the best cryptos stands at around 13%. According to Coin Price Predictions, the maximum price that could happen in a year is between 18.2% and 15.1%. At the time of writing this article, the highest price of bitcoin in 2021 was $67,300, which happened on March 11th. The next maximum price was $69,900, which was reached on September 6th. Afterward the prices went down in subsequent months until recently the values were higher with only three dips being observed throughout 2021. Thus, despite recent ups and downs – prices still remain highly volatile.
Is It Safe To Use Crypto When Storing My Money Online? What Are My Options?
There are definitely risks when transferring money to someone else using crypto. The reason is that anyone can hack into these platforms and steal assets or make illegal payments. Moreover, the volatility of the crypto market is quite large because both consumers and traders can influence its prices and its state. Therefore, it is always recommended to conduct thorough research on any specific platform before deciding whether to trust it or not. There is also hardly anything safe about storing crypto and making deposits or withdrawals.
Some services are built on top of traditional banking, but most of them cannot withstand the effects of hacking attacks due to security flaws or lack of proper encryption techniques. So, always make sure that the platform you choose guarantees the protection of client funds.
Overall, cryptocurrency is growing in popularity as it is accessible to everyone for free, it offers unprecedented opportunities, and most importantly it is currently gaining popularity. Whether you want to invest in it or acquire it, know that you are going to benefit greatly from the evolution of the technology.