A beginner’s guide to cryptocurrency - 3 minutes read
What Is Cryptocurrency?
In simple words, cryptocurrency is a digital asset. The name originates from the fact that all of its transactions are highly encrypted, making the exchanges highly secure. It is decentralised in nature, unlike traditional currencies, which are managed and controlled by a central authority. A cryptocurrency is finite in number and at times equated to precious metals like gold and silver.
Cryptocurrency is created through mining, which is a process of very complex problems being solved by powerful computers, usually as a reward for making successful cryptocurrency transactions. In other words, the exchange of cryptocurrency often results in more cryptocurrency being introduced in the world.
Many cryptocurrencies use blockchain for managing and recording transactions, wherein multiple entities maintain identical transaction records, making it an extremely secure technology for your investments.
“The investors who do appreciate the blockchain technology and have specific views about which aspects of it are going to become major in the years to come can invest in specific cryptocurrencies that are the basis of those aspects,” said Swapnil Pawar, Founder, ASQI Advisors.
The Crypto Market
The total worth of the cryptocurrency market as of May 2021 is a whopping $1.7 trillion. There are over 10,000 listed cryptocurrencies at the time of writing, and this number is only bound to increase. Out of this, Bitcoin has the largest share in terms of market capitalisation, amounting to about $650 billion, followed by Ethereum and Tether.
Acceptance of cryptocurrency around the world has been on the increase for many years now. For example, when a major US online retailer – Overstock.com – started accepting Bitcoins in 2014, it made $124,000 in Bitcoin sales on the first day itself. More interestingly, corporations are also recognising the investment value of this digital asset – US-based MicroStrategy Inc. purchased more than $1 billion of Bitcoin in 2020!
Bitcoin – The Gamechanger
Bitcoin emerged as a gold rush of opportunity when the world realised problems with the existing financial systems after the 2008 crisis. It was the very first crypto developed through blockchain and perhaps changed the way people thought about money. In 2013, Bitcoin was recommended as the best investment by Forbes. Today, it has become a household name.
As quoted by Deloitte, over 2300 US businesses accepted Bitcoin as a mode of payment in late 2020, making it an attractive asset to hold for a common man.
Why Invest in Bitcoin?
In addition to being highly secure in nature, Bitcoin is also peer-to-peer (P2P), which means it involves no intermediary (such as a bank or credit card agency) and offers a minimal transaction cost.
It is fast and fully transparent – for instance, every Bitcoin transaction you make is recorded in a public ledger that is visible to all. It cannot be forged or counterfeited. Blockchain transactions are also irreversible, making the chances of fraudulent activities even smaller and your investments much more secure. You can trade Bitcoin through exchanges such as WazirX, which are a safe and secure platform for investors.
The Bottom Line
With cryptocurrency, the future is here. To start investing, you need a trusted cryptocurrency exchange such as WazirX where you can buy, sell and trade cryptocurrencies like Bitcoin, Ethereum, Tron, and more.