Crypto investment has become a huge sector in the last decade. When bitcoin was first launched in 2009, not many people could predict just how big digital coins would become. Those that could and invest early are probably retired on some tropical island by now, enjoying their well-earned wealth. The rest of us who were short-sighted are left to play a catch-up game, in hope that tropical islands are in our future as well. Before you plunge into the world of cryptocurrencies, here are a few things you need to know before investing, as well as a list of the most popular currencies out there.
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History of Cryptocurrency
It all started in 2009 when Satoshi Nakamoto published his whitepaper titled “Bitcoin: A Peer-to-Peer Electronic Cash System”. Many disparaged mysterious author, claiming that a currency he described will never take off and it is a mere intellectual exercise. It didn’t take long for bitcoin to prove them completely wrong and make them eat their words. At the moment, bitcoin is traded at more than $31,000, which is not bad for an intellectual exercise. The success of bitcoin spurred other digital coins into existence, and in January 2021, there were more than 4,000 of them on the market. Of course, you don’t need to be familiar with all of them to be a successful crypto investor. Read on and we will tell you which ones you need to focus on.
Cryptocurrency Market Volatility
Cryptocurrencies have many uses, like using Bitcoin for online casino deposits and other online payments. Their obvious advantages over their fiat counterparts make them ideal for almost any form of payment over the Internet. However, there are some downsides you should be aware of before starting a career as a crypto investor. The biggest is the volatility of the market. Cryptos aren’t as matured as we would like them to be, so the market is highly susceptible to manipulations and can move up or down completely unpredictably. That is why many traditional investors tend to stay away from cryptos and avoid dealing with them, if at all possible. Unfortunately for them, digital coins are here to stay, and sooner or later they will have to adapt to the new reality.
Advantages of Cryptocurrencies
The advantages of cryptocurrencies are many, so let’s focus on the most important ones. The first is anonymity. You can have millions in crypto and nobody has to know about it, as your accounts are completely anonymous. This attracted some unsavory characters to bitcoin early on, creating a shady reputation for it and deterring investors from using it. Fortunately, those days are behind us, and crypto is now considered both a legal tender and a worthy investment. The second advantage is the speed of transactions. Crypto transfers are almost instant, thanks to the architecture of the network. This is a major upgrade over traditional bank transfers that can take hours, even days, to clear.
Most Popular Currencies
With more than 4,000 cryptocurrencies on the market, selecting the right ones for investment can be a daunting process. Many of these cryptocurrencies are nothing but an attempt at a quick cash grab on part of their creators. Some of them are outright scams, designed to separate naïve people from their money. Sadly, it works far too often. That is why the best course is to stay with popular currencies, as they have the public trust. Selecting the ones you want to buy is up to you and your knowledge of the market, but we would recommend choosing one of these seven for starters. As you learn more about cryptocurrency and gain experience, you can venture into less known coins, but keep in mind that they carry much greater risk.
Bitcoin remains the gold standard in cryptocurrency trading, as the coin that started it all. IT is the most popular and most valuable cryptocurrency at the moment and it will stay like that for foreseeable future. One thing that is preventing bitcoin from becoming a global payments system is its volatility, but as the market matures, that volatility will subside over time.
A currency of network with the same name, Ethereum is an open-source blockchain project accessible to anyone and with possibilities of adding other currencies to the system. It was launched in 2013 and has grown to become the second most valuable currency, with only bitcoin above it.
Designed as the currency of the Ripple digital payment network, XRP promises faster digital payments within their network. It is supposedly also a more efficient way of transferring money, so that should make it attractive to large-scale purchases. Ripple allows XRP to be bought for other purposes outside their network as well, which should translate to some promising investment opportunities.
Lumen is a native cryptocurrency or Stellar network. IT is a decentralized blockchain network, executing hundreds of millions of operations by more than four million accounts. This makes it highly versatile and resilient to any form of attack and a preferred form of payment for many large corporations.
Described as the world’s first digital dollar (mainly for marketing purposes though), USD Coin is a brainchild of major financial corporations like Goldman Sachs, Baidu, and IDG Capital. Its value is tied to the US dollar, which makes it a convenient payment method due to its stability. Lack of volatility is purposefully built-in and that is why it is highly sought-after by major banks.
Based on Oracle solutions, Chainlink is a decentralized network that prides itself on safety and security. They claim that their network is tamper-proof and reliable, making it a perfect platform for any kind of monetary transaction.
Since bitcoin became highly volatile, it makes it unsuitable for monetary transactions and these days it is mainly used for investment purposes. To carry on the original legacy of peer-to-peer payments, Bitcoin Cash was created. Much stabler, it can perform the function its older brother was designed for.