Wednesday, February 09 2022
Cryptocurrencies have brought a revolution to the way people think about money. They allow you to buy things easily and securely because of USA-wide crypto merchant adoption. But at the same time, cryptocurrencies are volatile and dangerous investments. But what are cryptocurrencies? And how can you get started with them? If you are just stepping your toes into the decentralized finance space, these are the questions that need to be answered first.
You need to know what you're getting into and how you can do it in a secure and easier way. Here's everything you must know about cryptocurrencies, including how they work, some commonly used jargon, why crypto is the future, and how to buy crypto in the USA! Excited? Let's get started then:
First, We Have to Set The Basics Right:
What is Crypto?
Simply put, cryptocurrency is a type of digital money that's created, mined, and transacted via blockchain technology. Different cryptocurrencies like Bitcoin or Ethereum use different blockchains with their own network of computers called nodes. These computers or nodes are run by people known as validators who mine these cryptocurrencies using the processing power of their computers. The validators keep the network transparent by keeping track of and verifying the transactions carried out by crypto users.
For Example: if Jamie sends some bitcoins to Lisa on the blockchain network, the network's validators will confirm the transaction took place, which becomes an entry of the digital ledger of that network.
Each network has its own means of transaction validation called consensus protocols that decide which validator gets to validate a transaction. The validator that gets assigned this task earns a rewards, typically in the form of cryptocurrency, for using their computing power to validate the transaction. Some blockchain networks use mining, while others leverage time stamping or staking.
So How Do People Buy or Sell Crypto?
There are multiple ways to investing crypto, but the best and most commonly used is via cryptocurrency exchange apps like Voyager and Binance. Here, people can use their fiat currency (regular money like USD) to purchase a cryptocurrency available on the platform. But these are centralized exchanges because they allow you to exchange fiat money with cryptocurrencies.
There are also decentralized exchanges called DEX's that require you to have a crypto wallet, public keys, or private keys. You can send and receive crypto using the addresses of these wallets or the keys. However, since these are decentralized forms of transactions, you can only exchange cryptocurrencies – so no fiat money.
Types of Cryptocurrencies:
Before you dive into the crypto investing game, you need to know how many types of cryptocurrencies are there, as this will help you decide where you should put your money. In a general sense, there are two kinds of cryptocurrencies; Bitcoin and alternative coins (Altcoins).
Although both of them operate on the blockchain, bitcoin was the first cryptocurrency and has dominated the market with the highest value, so it became a separate category. Altcoins are all the other crypto coins except bitcoin, and there are many types of altcoins available today; some of the mainstream ones include:
These are just like the everyday physical contracts but consist of algorithms and are programmed to execute on the blockchain automatically. Unlike bitcoin, which is typically limited to being used as a currency, smart contracts can also execute contracts once certain pre-programmed conditions are met between two parties who have come to an agreement.
With smart contracts, things that would otherwise require legal agreements like lending and borrowing become digitalized. The encrypted contract is stored across the blockchain; it cannot be edited or tampered with in any way, making it way secure. Smart contracts enabled a wider crypto merchant adoption, especially in the industries with high risk like insurance, banking, and finance.
Decentralized finance, or DeFi for short, is a part of the crypto space that is centered on peer-to-peer digital finance and transactions. By leveraging the power and efficiency of smart contracts, Decentralized Finance platforms provide users with a space for borrowing, lending, saving, and trading that eliminates the typical paperwork and bureaucracy.
These are the cryptocurrencies with static value and linked to a fiat currency like dollars. An example of a stablecoin is USDT (USD Tether) which is linked to the value of United States Dollars.
Since fiat currencies back stablecoins, they experience regular volatility in the market, keeping them stable (in line with the value of their fiat currencies).
Now, Let's Take a Gander at The Common Lingo:
Although the crypto market is similar to the forex and stock markets in many ways, it has its own jargon and terms that you should be aware of to navigate the market easily:
The terms above are just some of the most common jargon you'll come across in the crypto space. Keep learning the crypto language by using glossaries like CoinMarketCap to increase your crypto vocabulary.
Next, Let's Talk About How Crypto is Making Its Way into Financial Space:
At the time when Bitcoin was launched in 2009, there were more critics of cryptocurrency than supporters, and even top-tier investors like Warren Buffet urged people to stay away from it. However, as time passed, the value of bitcoin and other cryptocurrencies that were launched later on, like Ethereum, grew, which made many heads turn.
Now, the crypto market size in the U.S alone was recorded at $1.6 billion in 2021 and is predicted to grow to $2.2 billion by 2026. This massive increase in size makes everyone wonder why on earth people are investing in something so new and volatile. Well, let's look at a few reasons below:
Although it started with just one coin - bitcoin in 2009, we have over 8,000 cryptocurrencies on the market today.
With such a HUGE choice range, it is easy to find the cryptocurrency backing a project fitting your interests, including sports, education, gaming, art, and philanthropy. Crypto has made its way into many industries besides just finance.
It's Becoming More Sustainable:
Many eco-conscious investors disliked the idea of mining, where too much energy is wasted to operate the blockchain. However, validating blockchain transactions is becoming more energy efficient with the proof of stake concept. Developers are consistently creating more protocols that are making mining useless. With this new revolutionary concept, more and more investors will be jumping on the crypto bandwagon.
At the beginning years of crypto, anonymity was there, but there wasn't a high level of security. We've all come across the horror stories of people losing their private keys because of phishing scams or poor storage.
However, security has improved significantly with stringent regulations, built-in security technology in some of the best crypto exchange apps, and 2-Factor Authentication; another reason why more and more people are investing in crypto.
Crypto Merchant Adoption is a Reality Now:
Gone are those days when you had to convert your crypto investment profits into USD to purchase something in retail stores. Now, more and more bitcoin merchant services are popping up throughout the globe, making crypto merchant adoption a reality.
Thanks to altcoin and bitcoin merchant services, you can now purchase physical goods from many stores and pay them in crypto, including Burger Kings, KFC, Virgin Galactic, AT&T, and more – you can look at this list for more stores. And that’s not it; many more stores will start accepting crypto payments with time.
Finally, Let's Discuss How to Buy Cryptocurrency in the US - Simple Steps to Enter the Game:
We are past the time when you had to search how to buy cryptocurrency in the USA and spend hours trying to figure things out, only to give up in the end. Purchasing cryptocurrency is pretty easy nowadays. Here's how you can do it:
Choose a trusted exchange website or app where you can get crypto in exchange for your fiat currency. The best cryptocurrency app for beginners is Coinbase, mainly because its U.S based, so its policies are pretty solid. Voyager is also a great option, and so is Coinmama. You can learn more about these platforms and make an account on any one of them.
Well, that's pretty much it. If you do these steps, you can purchase your first cryptocurrency in just a few minutes once your account is verified on the exchange.
Every piece of information provided here is just to educate people about crypto and how they can purchase it. We are not suggesting that they buy anything because the crypto market is volatile, and you SHOULD NOT invest without prior knowledge. Furthermore, the previous performance of any digital asset, including cryptocurrencies, does not guarantee future gains because the value keeps changing with time and economic factors. Therefore, we suggest you start educating yourself on how to analyze the market and then make any trades but remember, there's always a risk with crypto investments, so be very careful.
Tuesday, February 08 2022
The cryptocurrency market is the perfect example of how hard it can be to predict the future. The price of cryptocurrencies fluctuates a lot. What's more, it is not very easy to find out when the best time to buy crypto is. However, some signs can help you figure this out.
If you're just getting started or investing in crypto for the first time, it's best to buy after you've done some research and educated yourself. This article will discuss the background of crypto, why people are buying it in such high volumes when the best time to buy crypto is, and how to do it in the simplest way possible. So make sure to stick to this guide till the end.
What is Cryptocurrency? - Let's Start with the Basics:
We know you're here to find out the best time to buy crypto and not get a lecture on what it is, but getting familiar with the concept of crypto IS VERY IMPORTANT! You need to know what you're getting into before putting your hard-earned money into it.
Simply put, cryptocurrency, or crypto for short, is a digital currency. Here, instead of transactions taking place through centralized financial institutions like Banks, crypto transactions are done on the blockchain (a distributed database that maintains and stores transaction records in a fully decentralized way).
Cryptocurrency is decentralized because its policies are governed by the users who mine or stake it on the blockchain called validators. The network of validators automatically verifies transactions happening on blockchain around the world, so the proof is stored in millions of computers in a secure, encrypted form.
Blockchain has changed the way people look at financial autonomy via a completely digital system of commerce. The main differentiating factors are transparency and ease of access because you just need the internet to purchase crypto. Plus, the use cases of crypto for payments are endless. You are not limited by the financial regulators on where to spend your own money; you can buy or sell whatever you like and do transactions in crypto.
The gist is that, like democracy, crypto is also for the people and by the people without the influence or control of any single entity. This brings freedom of usage to crypto users, which is not available to those using centralized currency.
What's the Reason Behind the Crypto Market's Explosive Growth?
Since Bitcoin's launch in 2009, the crypto industry has grown A LOT! With now more than 4,000 cryptocurrencies on the market, from decentralized finance (Defi) to NFTs, stablecoins, and more, the industry is still growing. In fact, the media and many investors, including Gary Vaynerchuk, believe the market is still in its early stages, especially after the introduction of NFTs.
The biggest sign of this massive continuous growth of the crypto market is how it is affecting surrounding institutions, with many financial institutions adopting its use, despite being against it early on. The adoption of crypto in recent years has increased significantly, with investment firms, businesses, and even banking institutions trying to incorporate it into their payment options and portfolios.
Moreover, governments are now starting to pay serious attention to incorporating stablecoins as central bank digital currencies (CBDCs). Even though the volatile nature of the crypto market may produce more reserved investors, they are still, including many conservative banking institutes, starting to suggest cryptocurrency use to diversify the portfolio.
With such a worldwide revolution in the adoption of crypto by both individuals and traditional financial institutes, the crypto market size is getting bigger with time.
Reasons Why People are Buying Crypto:
Now you know that there's a lot of potential in the crypto market, and it is still in its infancy stage. But you may wonder; what about those who didn't get into the game early on? Why are they buying it now? The simple answer is that crypto offers advantages that the traditional finance market doesn't. Let's have a look at them below:
Stay Above the Inflation:
The global economic condition is in front of everyone - and it's not looking good. If we just look at the U.S, then the annual inflation rate reached 7% in December 2021 from 1.4% in January 2021 - you can now imagine how things will be in coming years. Every day there's an increase in the cost of necessities, and the government is just putting a loose band-aid over this quickly spreading infection by printing more money. But as per the laws of economics, printing more fiat currency decreases its demand, resulting in inflation.
In contrast to the above, Bitcoin has a limit; it cannot be mined after a certain number of bitcoins (21 million) are created in the market. This puts a cap to the decrease in its value and actually points towards an overtime increase in the value because of the 21 million bitcoin limit. Many often refer to bitcoin as 'digital beachfront' or 'digital gold' just because of this limited supply. So those looking to beat the inflation in the future purchase and sit on their digital BTCs, typically for a few years and then sell for higher prices.
Invest in Fractions:
One of the benefits to investors interested in crypto is that they can purchase portions of the crypto assets instead of having to purchase the whole thing. For instance, if you want to invest in bitcoin, you don't have to purchase a full bitcoin to own it. You can buy a part of it depending on how much money you're comfortable with investing. So now, if bitcoin sees a rise in its value, the value of your portion of BTC will increase as well, giving you a return on your investment. You can purchase small portions of bitcoin or other cryptocurrencies whenever you have some loose cash lying around. With this approach, you can accumulate a big portfolio of different cryptocurrencies over time, including BTC, ETH, XRP, and so on!
So, Is There Still a Good Time to Buy Crypto?
The Crypto market has different facets, which is not the case with stocks, and this makes it possible for investors to get in the game at any time. There is no doubt that those who jumped on this bandwagon in 2009 saw the most returns on their investment when BTC was just equal to the cost of a Pizza. So yes, most people have missed that massive, life-changing opportunity, but that doesn't mean that there's no second best time to invest.
The current crypto market is still in its early stages, and it is gaining momentum at a remarkable pace, even after 10 years of consistent rise. Many powerful voices in the investing community, including Gary Vee, Elon Musk, Micheal Saylor, and Barry Silbert, are firm believers of this market's bright future. Plus, with the increase in the adoption of cryptocurrency by financial institutions, it's evident that right now is also a good time to dip your toes in this massive ocean.
Here's How You Can Get Started with Crypto Investing:
We are still at the start of this worldwide financial revolution called decentralized finance (or, in other words, the use of cryptocurrencies), so you are still not late to the party. All you need now is a few tools to get started to decrease your chances of losing money. Here's how you can get started:
Increase Your Knowledge:
The first step to investing is to educate yourself. If you're not a seasoned investor, you need to learn two kinds of analysis; technical (learning how to read charts and patterns of prices) and fundamental (learning how global changes like COVID19 affect the market). Make sure to hit YouTube and start from the basics, then read advanced books on crypto trading, and then start experimenting on demo accounts to get the hang of the game.
Join a Reputable Crypto Exchange:
You will need a platform to help you buy cryptocurrencies in exchange for your fiat money. This platform is called a crypto exchange, and there are many good ones out there, including Coinbase and Binance.
You can make accounts there and start with demo trading. Here, you trade dummy cryptocurrencies based on real-time market conditions just to get some experience and try out the techniques you learn on Youtube and in ebooks. Once you get good at it, you can then start investing small portions of money and go from there.
Every single transaction of a digital asset comes with some risk because even though you are making predictions based on the history of an asset, past performance doesn't guarantee future returns or results. Furthermore, cryptocurrencies have a high speculative nature, which means their price volatility is high, so the increase and decrease in value are faster than traditional financial assets. This increases the risk with a possibility of the cryptocurrency's value going down to zero or near it. While diversifying your portfolio can help with risk management, it does not assure profits or loss protection. Therefore, traders should keep their goals and the associated risks in mind before making trades. Previous gains of any asset may not represent other customers' experience or guarantee any future success.