Cryptocurrency, also known as digital currency and crypto, is a new form of currency that has no physical existence. It exists virtually or digitally and has no central issuing authority; hence decentralized in nature. The technology used for the storage of its record is known as blockchain (a digital ledger), while the process of minting new cryptocurrencies is known as mining. Recently, the trend of crypto trending has touched its peak with a trading volume of 68 billion dollars, and the main reason is its lucrativeness.
Unlike the other assets offered in the conventional trading market, crypto allures consumers by providing them with massive gains over investments. Just in a few years, the asset class industry has acquired a valuation of nearly $1 trillion. Its popularity can be seen as the crypto assets, having been bought just a few months ago, can now provide more than 100% gains over them. It is just a matter of time before a gradual shift will turn this space into an integral part of our lives.
Another aspect of this industry is that it has expedited the process of transactions across even the countries. The cost factor, which is a vulnerability of conventional finance, has also been tackled by blockchain technology (on which cryptocurrency operates) as the transactions are stored on it without the lengthy and time-taking processes of maintaining records through paperwork in the case of paper money.
In the year 2009, a Chinese man named Satoshi Nakamoto launched a new form of currency and named it “Bitcoin”. It has received a mixed reaction from the public as most people are unable to understand or trust it.
In the year 2011, the second-ever cryptocurrency was launched, named Litecoin.
In the year 2015, people started to prefer crypto as a trading instrument instead of using it as a pure currency. Ethereum was launched, which soon became the second-largest digital currency in terms of trading volume after Bitcoin.
Now in the year 2022, the total trading volume of cryptocurrencies has reached a whopping 1.81 trillion dollars trading mark.
How are Cryptocurrencies Traded?
Cryptocurrency trading means taking financial positions on the price direction of digital currencies against the dollar or any other digital currency. They can be traded in multiple ways. The first way to trade cryptocurrencies is by dealing in the cryptocurrency itself by purchasing and selling it on trading platforms. The second way to trade them is by dealing with them as a derivative financial instrument, such as a contract for differences. The second method is more popular nowadays because it involves less capital outlay, and there is no need to own the assets.
How to Buy Cryptocurrencies
To buy cryptocurrencies safely, it is advised by experts to do it through cryptocurrency brokers or exchanges. There are hundreds of trading platforms available which provide facilities, guidance, and education as well. Traders open an account with one of these platforms and then transfer the investment money into the wallet provided by them. The trading platforms charge some fees but, in exchange, provide security and other features.
Where to Store Cryptocurrencies?
This question is relevant to you if you are dealing with trading cryptocurrencies by owning them. You would certainly be required to store it in a safe and sound place that is out of reach for hackers. These places are called e-wallets which is software used to store keys to your digital assets. There are two types of e-wallets being used. Firstly, the hot wallets use online software to protect the information, while the second type is cold storage which relies on offline devices. The second type is considered more secure because it involves fewer chances of hacking, but it is slightly costly as compared to hot wallets.
List of Popular Cryptocurrencies in Terms of Their Trading Volume
- Binance Coin
- USD Coin