London, UK, 2nd Oct 2021, ZEXPRWIRE –
What is Crypto?
Cryptocurrencies are a type of digital currency that can be used to store and transfer either virtual or traditional fiat currency. When you hear the word cryptocurrency think that it is an encrypted decentralized currency that can be transferred between peers and confirmed in a public ledger via a process known as mining.
FinancialCentre Broker Jamie Mor explained that privacy for users is very important in this system, which defines any other types of fund transfers apart from cryptocurrencies as illegal; unless they are registered with their real identities, thus leaving open the possibility for black-market trade (or illicit transactions) to exist outside government control. Transactions occur through a shared transaction database called a blockchain, which is typically run by a peer-to-peer network that collectively stick to a protocol in order to validate any new blocks formed. After being recorded, the data in any given block cannot be altered retroactively without the alteration of all subsequent blocks and a consensus of the network majority recognizing the change.
Bitcoins (or alternative units like XBT, bits) are created as a final reward that is received after payment processing work. In this the users offer their computing power in order to not only verify but also record payments into a public ledger. This is what we call mining. Today, individuals or companies mine in exchange for transaction fees and new bitcoins. Besides this, bitcoins can be obtained in exchange for fiat money, products, and services, provided other individuals accept them as payment as well.
The process of creating thee involves the use of encryption techniques that make it secure; thus, making new coins associated with certain blockchains difficult to counterfeit. These coins are comparable to physical money in many respects.
The cryptocurrency market is open to everyone, and there are no restrictions on participation. Like every market, there are specific rules and regulations, and price fluctuations create arbitrage opportunities while volatility allows for a substantial profit with the high risk involved. However, cryptocurrencies’ decentralized nature makes them independent of conventional banking and trading rules.
The cryptocurrency market is available 24/7 for trading with no need to conform to specific market hours. Most cryptocurrency exchanges use Bitcoin as the universal trading unit, which leads to price slippage when large orders execute – especially during low liquidity hours. This means that you have to take into account all aspects of your potential investment before making a decision.
The massive rise in numbers of cryptos
Due to the growing popularity of cryptos, a spike in demand, and the decentralized status of crypto-currencies, their value is determined by the market forces of supply and demand. It has been reported that within a period of 1 year starting from September 2020, the number of available cryptos has increased by 4900. In last year’s September, the number of available coins was 7100, and after a year it has risen to become 12000. Mr. Mor thinks that the reason behind this massive rise is the fact that more and more people are joining the crypto market every single day and are looking for cheaper and attractive options.
These figures suggest that the crypto-currency market is dynamic and has room for substantial growth. However, not all cryptos in the market are capable of surviving this growth period.
Cryptos are susceptible to online theft by hacking, which is why it’s important to be aware of all the technology behind each crypto and to do your due diligence before making an investment.
Also, given that cryptos are decentralized and not governed by any financial authority, there is no insurance for your cryptos. This means that if they are lost, stolen, or destroyed – you will not be able to recover them.
In the pandemic, the number of options for crypto traders has increased significantly, but this does not mean it is for all good. Lack of regulation and control by a central authority could mean that you lose your capital due to the volatile nature of any of these new and unreliable cryptocurrencies. There are many factors that one needs to consider before purchasing any crypto.
Mr. Mor warns that as a newbie to the crypto-world, you need to start with a careful market survey and have a high level of technological understanding regarding cryptos before you start investing. You also need to be aware that there are many risks associated with this market and that it is still very volatile. Today one of the major reasons why none of the cryptos have surpassed Bitcoin in popularity is that not all of them check all the boxes when it comes to technology, usability, and the ability to become a mainstream currency. One also needs to remain careful of the pump and dump schemes which might become more prevalent today with so many options.
Disclaimer: Our content is intended to be used for informational purposes only.
It is very important to do your own research before making any investment based on your own personal circumstances.
You should take independent financial advice from a professional in connection with, or independently research and verify, any information that you find on this article and wish to rely upon, whether for the purpose of making an investment decision or otherwise.