Cryptocurrency is the topic of the day. Everyone is talking about Bitcoin and Ethereum. But what are they exactly? From a layman’s perspective, all cryptocurrencies are virtual currencies that are used for transactions online. This post will explain what the Basics of Cryptocurrency are, how it is used, as well as how you can invest in them.
If you guys have come here in search of the answers to these questions, then BRAVO! You’re in the right place!
Cryptocurrency, as the internet describes it, is a “binary data designed to work as a medium of exchange wherein individual coin ownership records are stored in a ledger existing in the form of a computerized database using strong cryptography to secure transaction records, to control the creation of additional coins, and to verify the transfer of coin ownership.”
Basically, Cryptocurrency Trading involves buying and selling cryptocurrencies for profit. Like conventional currencies have a foreign exchange (forex), similarly, cryptocurrencies have their own digital currency exchange where people can engage in trading coins.
Now, do you ever wonder as to why cryptocurrency was created and who created it? Or am I just too curious about things?
Well, if you did too, then you must be all ears from now on.
But first, let me tell you the story behind the creation of the first-ever cryptocurrency.
As we all know, Bitcoin is the first cryptocurrency that was ever made. It was created and launched in 2009 by a developer named Satoshi Nakamoto.
Yeah, it’s pretty old, and I too was astonished to know that it’s just now that we are aware of its existence.
How did we not know about it before?
Coming back to its creation, Satoshi Nakamoto wanted to develop a way through which users could initiate and complete transactions within seconds without depending on anyone.
And this is exactly what cryptocurrency does! Cool, isn’t it?
Now the main point, Why was Cryptocurrency created?
1. Why Was Cryptocurrency Created?
Cryptocurrencies allow the user to carry out payments at wrap speed.
Zzzzooooppp….and it’s done!
Basically, a wallet containing a private key can be a number or an alphanumeric sequence that is associated with a wallet that has the ability to send or receive funds without a bank.
Now, my favorite part, the challenges!
The only challenge that arises here is the user’s ability to secure that wallet.
The benefit of Cryptocurrency is that, while conventional currencies can be kept safe in banks, Cryptocurrency can also be kept safe inside a computer.
Let’s take a look at other cryptocurrencies.
Apart from Bitcoin, there exist other cryptocurrencies that use the same principles, such as Ethereum, Dash, and Litecoin.
Each one of them has its own security system and its own exchange.
And among them, Bitcoin is the most popular.
Moving on, who created the first cryptocurrency?
2. Who Created The First Cryptocurrency?
As mentioned earlier, Satoshi Nakamoto received the inspiration for cryptocurrency while working at a military base.
Speaking a bit about Satoshi Nakamoto, after completing his military service in Japan, he moved to California and went on to work as an engineer in the state.
He was employed by an electronics company in California called Cypherpunk.
Nakamoto, after almost a year of experiments and tweaking in the program, finally created the Bitcoin.
However, what really made Bitcoin special and loved by the tech world was its security and cost-efficiency. Even the British scientist Nick Szabo, the first to draw a comparison between Bitcoin and its forerunner, cash, described Bitcoin as being as secure as cash but faster and cheaper than it.
In the time that Bitcoin existed, it witnessed an annual run rate of almost $5,000, and yet, people fell in love with it.
Now, do you have any idea as to how to trade Bitcoins and other Cryptocurrencies?
No? Let’s find out!
3. How to Trade Bitcoins and Other Cryptocurrencies?
Cryptocurrency has been generating tons of media buzz. But most of this buzz is centered around the price of bitcoin, and not on the actual benefits of cryptocurrency. The purpose of this blog is to demystify cryptocurrency. We will also look at how you can invest in cryptocurrency and what you can use it for.
Cryptocurrency exchanges have made trading with cryptocurrencies much easier.
In order to trade in cryptos, you will first need to place an order in the exchange before accepting it.
There exist numerous exchanges in the market, but only two of them, Okex and BitForex, are considered reputable by crypto experts. BitForex and Okex are the most popular ones in the crypto market.
A few other cryptocurrencies that you can trade are Ethereum, Ripple, Litecoin, Cardano, etc.
Trading done! Now, what after that? What do you do with the cryptos that you’ve purchased?
How do you actually use these cryptocurrencies?
Three exist several ways through which you can trade these cryptocurrencies, but the simplest of them all would be to use an exchange.
Let’s hop into the most interesting topic of the article, the risks of trading Bitcoin!
4. The Risks of Trading Bitcoin
We all know that whatever field we go in, there’s risk everywhere. And so are with Bitcoin.
Given to its huge demand, there exist numerous opportunities that users can consider when it comes to trading cryptocurrency.
With Bitcoin, users can buy various products online, such as gas, ciphers, and e-books.
However, just like any other commodity, cryptocurrency’s value fluctuates and is affected by the demand. When it’s used in smaller transactions, it can be seen as a safe investment for its real-world demand. Whereas bigger transactions have more risk factors involved.
The fluctuation in cryptocurrency values can also lead to its collapse. The main downside of trading bitcoin is its volatility.
According to Investopedia, Bitcoin’s value has had an all-time high of $63,000, as well as an all-time low of $1,267.
Crazy how it can go sky-high but also fall down like a crashing plane, right?
Moving on, are you aware of the term market volatility?
Why am I asking?
Cause that’s the next thing we’re gonna look at. The Volatile Market!
5. Volatile Market
Big swings in either direction are known as the volatility of the market. In simpler words, the fall and rise of a market, which then affects its trading and other related things, in short, the whole market.
In terms of cryptocurrencies, the crypto market ad its activities are highly volatile. This is because they are influenced by a number of factors, such as how people in developing economies are trading in cryptocurrency as they try to
make their ends meet, etc.
However, the high volatility of the market will not deter investors from trying their luck in cryptocurrency trading, as they are well aware of the risks associated with the entire process.
Though the cryptocurrency market is still young, it has already seen rapid development and disruption in the past years and has become a legitimate payment option in many countries, including India.
Cryptocurrencies in India have already seen an increase in their trading.
Quite a good development!
Now that we had a look at the risks involved in Bitcoin trading and the volatility of the market let’s have a look at the difficulties that exist in using Bitcoin for our everyday transactions.
6. Difficulty in Using Bitcoin for Everyday Transactions
Problems exist everywhere, and even Bitcoin isn’t immune to it.
The problem here, however, is that the currency was created for use only within the cypherpunks community.
Whhaatt’s Thaat now?
In its early days, users had to find and contact other users that they shared in a
certain interest such as developers.
This, however, was very difficult for common people.
Thus, in 2010, a Spanish programmer named Javier Garzón developed Bitcoin Wallet to make it easy to interact with bitcoin. Since then, users are able to send and receive Bitcoins and perform transactions on it through digital wallets.
Bitcoin Value and the Rise of Cryptoassets is one of the biggest challenges in the production and utilization of bitcoin in the inflow of billions of dollars.
In 2008, it was worth approximately $0.003.
Moving on now, we’ll be having a look at the fraud risks involved.
7. Fraud Risk
Any kind of transaction always has a fraud risk cause there always exist people who love embezzled money.
Cryptocurrency is a completely decentralized system that is currently under ATTACK. It’s becoming more and more prevalent as criminals are realizing that digital currencies are one of the easiest methods to disguise their actions.
Reports show that an approximate amount of $350 million has been stolen in the United States in the year 2017 alone.
Cryptocurrency theft and fraud are quickly rising.
And you know why the Federal Bureau of Investigations (FBI) doesn’t support the growth of cryptocurrency?
Because of the prevalence of cryptocurrency scams and fraud.
Cryptocurrency is a fast-moving industry, and fraud is expected to rise with the rise in the use of digital currencies.
There exist numerous methods to trade cryptocurrencies. Whether you’re a beginner or a professional trader, this guide will help you get started on investing in cryptocurrency trading. Make sure you consider all aspects before you start trading. Be vigilant to avoid loss and fraud risks.