Laszlo Hanyecz got into the books of history when he bought 2 large pizzas for 10,000 Bitcoins from Papa John’s in May 2010. The value of Bitcoins was $30 back then and currently, it is more than $560 million. What does this say? In the last decade, there has been significant growth and increase in the value of Bitcoin. In 2020, cryptocurrency seems to have shot up by almost 500%.
Bitcoin, in itself, hit the highest mark of over $61,000. This growth is worth noting if you would want to venture into the world of cryptocurrencies.
Cryptocurrency is virtual money which is referred to as decentralized finance. This means there is no central bank that monitors or regulates this currency. Instead, all transactions are recorded on a public ledger known as blockchain technology. In recent weeks, cryptocurrencies are gaining traction and there are thousands of coins that have been created and available to the market. Crypto coins can be used to make purchases as there are several merchants that accept this mode of payment.
A good number of people, however, choose to use cryptocurrencies for investments. There are many who would wish to start trading and investing in coins like Bitcoin but do not know where to start. Let us look at some of the basic things that you need to be aware of before making a decision to invest in cryptocurrencies.
Basics of the Cryptocurrency World
In definition, cryptocurrency is digital money, which has no physical form. In essence, these are digital entries that are based on software. This means when you buy the coins, you will get digital assets. The money is represented in tokens, which equate to the specific amount of coins that you have. The tokens will be based on the prevailing market value and you choose to sell or cash out the coin. There are secure trading platforms like BitQT where you can invest and trade your cryptocurrencies safely.
Remember that there is no institution or authority that regulates the cryptocurrency world. The value of the coins is regulated by the supply and demand on the network. For instance, Bitcoin has a cap limit of 21 million tokens, which was set by the creator, Satoshi. In 2009, when Bitcoin was launched, the value was rather insignificant. However, times have really changed and the value of Bitcoin has really increased. Being the pioneer cryptocurrency, Bitcoin affects the prices of the other coins.
Cryptocurrency Wallets
Seeing that cryptocurrency is not an actual currency, you cannot have it stored in your bank account. This is the sole essence of cryptocurrency wallets; which are safe programs, designed to keep track of your coins. There are so many different types of digital wallets and each is designed with its unique features. The wallets are safeguarded by private keys which allow the rightful owners to use the coins. In order to receive funds in the form of cryptocurrency, you will need a public key.
There are hot and cold wallets and you can choose what works best for you. The cold wallets are ideal for people who have high amounts of tokens and their safety rides on the fact that they are not connected to the internet. These are physical devices that will store your digital currency. Hot wallets, on the other hand, are connected to the internet and are known as exchanges. Some of the popular crypto exchanges are Kraken and Coinbase and these are software programs that can be installed in the cloud or on your preferred device.
Conclusion
Cryptocurrency cannot be ignored and both critics and enthusiasts agree that this is a game-changer in the financial markets. With the volatile nature of virtual currencies, you can make a whole lot of money through such investments. However, the risk levels are also significantly higher. As such, trade with caution.
