WHAT IS CRYPTOCURRENCY
Cryptocurrency is a kind of digital or virtual currency that is based on Blockchain technology. Cryptography, an advanced encryption technology is used to create and mine Crypto. There is no physical form of Cryptocurrency and has a completely online entry as well as a database.
TYPES OF CRYPTOCURRENCIES
Though there are several thousand types of cryptocurrencies globally and many more additions are going on with time.
On a utility basis, there are mainly four types of digital currencies.
Some of the most common cryptocurrencies include Bitcoins, Ethereum, Dogecoin, BNB, Cardano, XRP, etc.
CRYPTOCURRENCY MINING
In simple words, crypto mining means generating cryptocurrencies by use of Computers and specific software. It involves solving complex functions along with validating blockchain transactions. Anyone willing to and having proper software and hardware can become a miner, but the cost of hardware and the tough competitive nature of solving mathematics has made it a tough task in recent days.
It has become a task for well-trained and high-end groups of people.
HOW TO BUY CRYPTOCURRENCY
One method is obviously Mining, which is not everyone’s cup of tea.
Nowadays, there are a lot of EXCHANGE points where you can buy or sell Crypto. Some of them include Coinbase, Zeb pay, WazirX, etc. You can buy crypto in fractional quantity owing to the high prices of some of them (1 Bitcoin = 28,990 $).
These Exchange points need your KYC documents to validate your authenticity. And then, you are ready to make your first purchase.
Suppose you want to buy 1 Ripple. You need to pay Rupees equivalent to 1 Ripple, in this case, Rs 31.58 (1 Ripple = Rs 31.58) by any payment method using a Debit card, Credit Card, UPI, or something else. And wait for the price of Ripple to rise.!
ADVANTAGES
High Volatility, High risk, and thus High Reward.
There is more than 10,000 crypto available in the Market. Their tendency to experience sudden spikes makes them a lucrative choice of investment. Prices are governed mainly by a balance between supply by Miners and demand by purchasers. This supply-demand momentum can sometimes turn into heavy returns.
Crypto Market is open 24x7x365.
With Mining being done around the clock, you don’t have to wait for the Market to open or close as is the case with Stocks.
Crypto can beat Inflation.
As crypto isn’t based on any physical currency or linked to any country’s economy, its prices reflect worldwide demand. Their returns are seen to be much higher and are attractive investments to beat Inflation.
User-Friendly Interface of Buying/Selling
With the passage of time, buying and selling of crypto have become easier day by day. Crypto can be bought in one’s own currency, making it easy to possess some.
Anonymity
Buying and Selling of Crypto are completely anonymous and thus totally private.
Decentralized nature.
As Crypto is not issued by any Government or backed by a Central Bank, there is no interference or influence from any monetary policy.
DISADVANTAGES
Volatility.
As there is no limit to the height, crypto can rise, there is no limit to its lows. If someone is looking for a comparatively stable investment option, maybe crypto is not the answer.
Security risk
Although Cryptos are assumed to be safe, the Exchanges do not qualify the same. The data store of Exchanges can be hacked, thus risking access to lots of accounts.
Power in a few Hands.
Although decentralized in nature, the flow and mining are controlled by the creators and organizations. They are very few and more importantly still behind the curtains.
No Government Controls
Being decentralized can be counted as an advantage as well as a disadvantage too. Crypto transactions don’t come with legal protection and are not regulated by any Bank or Government institution.
Limited Credibility.
Although few companies (such as Microsoft), as well as Countries, are accepting Crypto as a payment method, the majority still don’t consider it legal. Some countries have put a ban on the use of Cryptocurrencies.
FUTURE OF CRYPTOCURRENCY
Although there is a high profit attached to Crypto investment, many still view it as a risky investment. The price of Bitcoin has risen from 0.08 $ in 2010 to 28,990 dollars as of today (isn’t it amazing). It is assumed to be the Future of the payment system.
But the reality is, it’s still a new and unpredictable investment method, without having much historical background to make predictions upon.
Invest as much in Crypto, as you are prepared to lose. Suppose you wake up one morning just to find out, that Crypto has been banned by the developed Countries rendering it worthless, then what?
There is a need for one international regulation which can check on all types of crypto. Worldwide acceptance and growing faith may strengthen beliefs in cryptocurrency. Still, a long way to go.
SOME AMAZING FACTS ABOUT CRYPTO
- The total amount of Bitcoin is limited.
- Dogecoin, one of the hottest Crypto started as a Joke.
- The creator of the most famous crypto, BITCOIN is still anonymous to the world.
- Although considered illegal, the Crypto gains are taxable in nature.
- China is considered to be the biggest Cryptocurrency Miner.
- There is a long list of countries that have banned Crypto. Some of them include ALGERIA, BOLIVIA, ECUADOR, NEPAL, BANGLADESH, CAMBODIA, etc.
- In 2010, a person paid 10,000 Bitcoins for two Pizzas. That would have been equivalent to 29 million US dollars as of today.!!!
