All or you must have come across the word “cryptocurrency” or “bitcoin” in day-to-day life. Either have you invested in the bitcoin and other cryptocurrencies or must have read somewhere. Cryptocurrency has attained an excellent level over the years. Many people widely adopt it not only for making payments but also for trading. Thousands of traders have harvested a massive amount from these digital currencies. Thus, it is a good investment which entirely does justice with your spend money. This guide is dedicated to cryptocurrencies and how to invest in cryptocurrency. We will wrap up the article by listing the name of top brokerage firms which facilitate currency trading.
What is cryptocurrency?
A cryptocurrency is a virtual or digital currency that investors and many people use to trade and make payments. The best thing about crypto is that all transactions are protected by cryptography. Thus, this makes it nearly impossible to double-spend and counterfeit. Other things or significant points of these currencies include:
- Cryptocurrencies have made the entire money transfer system easier and straightforward. They involve only two parties without any intervention or requirement of a third party, such as a credit card firm or bank. These transactions are safeguarded by the private key and public key, blockchain technology, cryptography, and other types of incentive techniques such as proof of stake and proof of work.
- Modern digital currency provides traders with an account address or “wallet,” which has two types of keys. The private key and public key. As the name suggests, the private key’s information is only limited to the owner, and he/she uses it at the time of signing transactions. The information of the public key is visible to other traders.
- The mining process fees are required during the transfer of money. Hence, allowing traders to avoid steep charges (taken by financial bodies and banks for wire transfer).
- Cryptocurrency is a decentralised system that is not guided by any government or banking authority. You can use it to buy and sell services and goods.
- It is generally available 24 hours a day and seven days a week as no centralised government controls the cryptocurrency market. All the transactions take place between individuals via brokers and cryptocurrency exchanges across the world.
Types of Cryptocurrency
Bitcoin was the first cryptocurrency that was designed based on blockchain technology. It is one of the popular and widely traded cryptocurrencies in the financial world. Its popularity is so huge in the real world that though there are many options available, traders generally prefer this over other types.
Bitcoin came into existence in the year 2009 and was designed by a group or individual known as Satoshi Nakamoto (a pseudonym). As per the report of Nov 2019, around 18 million bitcoins were flowing in the financial market. Analysts estimated the aggregate market value of all these coins at about $146 billion.
Apart from Bitcoin, there are thousands of options in the crypto market with distinct specifications and functions. Some of these are forks and copies of Bitcoin, and others are new currencies created from scratch. Altcoins is the other popular crypto. It includes Namecoin, Peercoin, and Litecoin. Apart from these, the other investment options are Cardano, EOS, and Ethereum. The aggregate value of all existing crypto coins today is around $214 billion. If we look at the crypto pie chart, we will find that Bitcoin alone currently makes 68% of this aggregate value.
What is the worth of cryptocurrencies?
The cryptocurrency market has offered traders some vital digital assets that help them in short-term investment as well as long-term investments. As per a report from CoinMarketCap.com, the total number of cryptocurrencies traded publicly is around 6,700. Till 18 Feb 2021, the total value of digital currencies was greater than $1.6 trillion, and the aggregate value of the most popular digital bitcoin was about $$969.6 billion.
Top cryptocurrencies as per market cap
On the basis of market capitalisation, we have listed the top 10 cryptocurrencies in the following points.
- Bitcoin: $969.6 billion
- Ethereum: $222.3 billion
- Tether: $33.1 billion
- Binance Coin: $30.5 billion
- Cardano: $28.3 billion
- Polkadot: $28.1 billion
- XRP: $24.4 billion
- Litecoin: $15 billion
- Chainlink: $13.3 billion
- Bitcoin Cash: $13.1 billion
What is a cryptocurrency wallet?
A cryptocurrency wallet is an application that enables you to retrieve or store your cryptocurrency. Here, you do not require a wallet to invest your funds or money like conventional currency. Instead, it helps you to keep things in one place. When you acquire any crypto like bitcoin, you can keep it in a wallet, and from here, you can use it for funds transfer or invest in something related to trading or services.
What are the different types of crypto wallets?
There are many types of wallets that provide different means to access and store crypto coins. Wallets can be divided into three broad categories, including paper, hardware, and software. The software can be online, desktop, and mobile.
- Hardware wallets: There is a slight difference between the software wallet and the hardware wallet. Here, the trader’s private keys are stored on a hardware device such as a USB.
- Desktop: They are installed and downloaded on a laptop or pc, and traders can access them from only those devices where he/she downloaded the same.
- Paper wallets: Paper wallet is simple to use and offers high security. They refer to printouts or physical copies of your public and private keys. Moreover, you can refer to it as a piece of software that is utilised to create a pair of keys successfully. These keys are further printed.
- Online: They are the types that only run on the cloud.
What are Cryptocurrency Exchanges?
Cryptocurrency exchanges are digital platforms that facilitate invest in cryptocurrency It also paves the way for other digital assets, including fiat currencies and some. In short, we can say that cryptocurrency exchanges act as a link between seller and buyer and earn money from transaction fees and commissions.
The difference between a cryptocurrency exchange and a broker
Some of the differences between a broker and a cryptocurrency exchange are:
- A cryptocurrency financial service provides an individual or a firm that act as a link between the investors and cryptocurrency markets. It facilitates the selling and buying of cryptocurrencies.
- Cryptocurrency brokers allow selling and buying for investors at prices fixed by the broker.
- A cryptocurrency exchange offers a digital platform for sellers and buyers who wish to trade cryptocurrencies and bitcoin with each other depending on current financial market prices
- Cryptocurrency exchanges are intermediaries which undertake charges for crypto trading.
- Deep knowledge about the trading mechanism and vigilant cryptocurrencies management is vital when you are trading on a crypto exchange.
Disadvantages of cryptocurrency exchanges
There are various disadvantages associated with trading on cryptocurrency exchanges. Therefore, it is better to go with a financial service provider over such risky and untrustworthy exchanges. Some of the major ones include:
- Privacy issues: Exchanges ask for several sensitive information and store the same. This includes email, IP address and data about your transactions. Thus, it is not at all safe.
- Loss of money: You must have heard or read many articles related to the hacking of exchanges and people losing their money. Thus, along with your personal information, your capital is at risk with these platforms.
- Data breaches: The rising AML or KYC policies by exchanges has resulted in a shape rise in data breaches. You must have heard the news published in CNBC on 7 May 2019 that more than 10000 Binance customers lost their sensitive data in 2019, and the hacker demanded 300 BTC. It further threatened that it would release the driving license, passports and photos of investors.
Top brokers to invest in cryptocurrency and bitcoin
Cryptocurrencies like bitcoin are traded on exchanges and with brokers. The choice of financial service providers is a vital part of trading. They not only enhance your investment portfolio but also help in enhancing your trading knowledge. Their educational courses and investment advice through live seminars boost your confidence and strengthen your market fundamentals. There are many providers which are not restricted to a particular country rather offer services across the world. Some of the brokers facilitating buying bitcoin and bitcoin cash are listed below:
Investing in cryptocurrency requires a reliable brokerage firm. Global TradeATF stands on all the criteria proving that the firm is not a scam; rather, it is safe. It is regulated by the Cyprus Securities and Exchange Commission and takes care of the privacy of investors. The broker offers the best service and trading platform to ease investments. It is popular across the world as it allows investors to trade on digital assets such as bitcoin cash, bitcoin, oil, metals and some more.
Like GlobalTradeATF, Brokereo is a popular investing firm. It is regulated by the Cyprus Securities and Exchange Commission and keeps your data privacy at utmost priority. It facilitates easy transfers from bank accounts. People prefer the firm because of its precise tools, which provide an accurate result for future bitcoin price. Along with this, it offers a wide variety of trading accounts educational data to enhance your knowledge. The Meta Trader 4 offered gives the utmost user experience. It is a renowned firm offering service across the world. The minimum deposit to start trading with the firm is $250. Moreover, deposit and withdrawal with the broker are simple and can be done through credit cards, debit cards and other global payment methods.
It is a globally renowned brokerage firm licenced under two central financial authorities. It includes the financial market authority and the Australian Securities and Investments Commission. The broker offers all research and trading tools to predict the bitcoin price. The firm is absolutely affordable, allowing you to open a trading account at just $250. It also allows trading on leverage through different trading accounts. The demo trading account offered is the best account for beginners, facilitating virtual trading with virtual cash and virtual bank account. Visit the website of the broker to know more and open an online trading account.
Is cryptocurrency a long term investment?
Definitely, cryptocurrencies such as bitcoin is a popular long term investment option. Over the years, we have seen drastic fluctuations in the value of bitcoin. The currency price of this coin is $54,235.00 (as per Feb 2021), and analysts predict that this will continue to rise in the future and will touch $145,000 in 2023. So, you can trust this coin in the long term. It has an immense potential to generate a massive amount and double your money.
The Bottom Line
The article deals with all the things you require to know before deciding to invest in cryptocurrency. Cryptocurrency is a popular and one of the profit-generating investments. It uses cryptography and blockchain technology to secure transactions. Investing in such a profitable financial tool can be both exciting and risky. Money is earned through hardships, and it takes seconds to lose everything if you choose the wrong broker or exchange.
So take each step vigilantly. Before getting started, you can opt for a demo trading account offered by the broker. It allows you to practice trade before entering real-world trading. You can also test your strategies and risk management techniques and alter them if you find them inefficient.