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“Cryptocurrencies” or “cryptos” have become all the rage over the past decade. Their popularity has been largely down to the soaring value of popular digital currencies like Bitcoin, Ethereum, Dogecoin, and others.
The most popular cryptocurrency Bitcoin, for example, has gone from $6,260.91 in November 2019 to $61,309.65 in November 2021, which is an eye-watering rise of more than 800%.
That said, the world of cryptocurrencies is complex. It is full of diverse concepts, technologies, and cryptos themselves that might be difficult to understand if you’re new to it just like most people.
However, if you start by understanding the basic jargon it becomes easier and more intriguing. Lucky for you, we’ve simplified everything you need to learn about cryptocurrency with this powerful blog.
A cryptocurrency is an asset that can be traded on an exchange much like stocks. Naturally, this means that the price of crypto is prone to fluctuations with the potential for earning lucrative returns.
Notice how the word “currency” is a part of a cryptocurrency. That’s because it’s a digital currency that can be used to pay for goods and services on platforms like Shopify that permit such transactions.
You’ll have to exchange a fiat currency that’s equivalent to the value of the cryptocurrency you want to own. But once you own some form of crypto, you might even be able to trade them for other cryptos.
Cryptocurrencies have also paved the way for a new avenue known by many names like Initial Coin Offering (ICO), Fair Launch Auction (FLA), and others that companies, especially startups, can use to raise money.
Think of it as an IPO that happens in the world of stocks. Instead of issuing stocks, companies “tokenize” an aspect of their business in the form of a native cryptocurrency like Cube’s Tikka Token.
If you want to learn about cryptocurrency, it’s crucial to understand how it works. Let’s dig deeper into the underlying technology of cryptocurrencies and common terms that you may have heard of.
Cryptocurrencies are built on blockchain technology. A blockchain records digital transactions using decentralization and encryption such that the transactions can never be altered.
Think of it like a ledger that’s set in stone. It can never be copied, only distributed to anyone who wants to verify past transactions. That’s why blockchain is also known as Distributed Ledger Technology (DLT).
Decentralization means that there’s no one entity with all the power. All facts can be independently verified by the public whenever they want to, which is considered to be a direct challenge to traditional systems.
The blockchain is thus known to reaffirm trust in data security and cryptocurrency security. In fact, this layer of trust is part of what drives the mass appeal of cryptocurrencies.
“Mining” is essential to keep new crypto flowing into circulation. However, let’s take a step back. We’ve spoken about how the blockchain stores transactions in blocks.
Confirming these transactions is important to maintain the ledger. Doing so is not easy. There are specialists known as “miners” who use sophisticated equipment to confirm blockchain transactions.
Whoever does so first is awarded a block of new cryptocurrencies. In a nutshell, mining cryptocurrency consists of two broad parts:
Miners get new cryptocurrency tokens for their effort, which is to primarily find a solution to a complex mathematical problem that’s only solvable using state of the art technology.
Every investment option carries a certain degree of risk. Cryptocurrency is no different. In principle, crypto carries risks that are observable with stocks and other market-linked securities.
Take for example the volatility of Bitcoin. In July 2021, Bitcoin fell below the coveted $30,000 for the first time in 6 months. However, Bitcoin is trading at $61,309.65 as of November 2021.
Critics point to other drawbacks of crypto like the pump and dump schemes it’s prone to, the unregulated market landscape, and the notion that no cryptocurrency has any real value.
Thus, the answer to should you invest in cryptocurrency lies in what you want from it. Many investors consider crypto to be speculative, which leaves room for them to earn profits albeit with relatively high risks.
Others consider crypto to be the definitive asset of the future and want to own a piece of it when it’s affordable. All things considered, crypto does carry useful benefits with above-average risk. You can consult a Cube Wealth coach or download a Cube Wealth App.
2021 has been one of the most important years for cryptocurrency. A significantly large number of investors have started to learn about cryptocurrency and trade it on exchanges like Binance.
Countries like India lead the pack with the highest number of crypto investors in the world at 10.7 crores (~100 million) investors. But the crypto market is still in its nascent stage.
This brings us to more forward-looking questions, most of which will define where the crypto market and its investors are heading a decade or two down the line.
These are just some of the things to look out for in the future of crypto:
Governments across the world are trying to figure out how to regulate cryptocurrency. The reason? There are many according to experts. Crypto is uncharted territory that’s different from traditional securities.
Furthermore, many believe that the grey areas in crypto can be exploited by wrongdoers. In light of these concerns, there have been attempts to exercise unclear laws and blanket bans on cryptocurrency.
Circa 2018 India when the RBI prohibited banks from engaging in crypto-based transactions. It didn’t last long as the Supreme Court of India overturned the ban in 2020.
That’s why the crypto community, including investors and experts, have voiced their concerns on unclear laws while being open to clearly defined regulations that are passed to protect rather than to spite.
Furthermore, clearly defined regulations would add to the legitimacy of cryptocurrency. This feat looks like it’s still quite a few years away as a lot must be cleared up first at the micro level and then the macro level.
Human history has been defined by creating a lot out of a few. First, there was fiat currency then there were FDs, stocks, mutual funds, P2P lending, and others.
Similarly, the introduction of crypto has led to several new wealth creation options like crypto ETFs, crypto mutual funds, and even crypto FDs along with blockbuster concepts like Defi, NFTs, and others.
In fact, ProShares Bitcoin Strategy ETF recently became one of the first Bitcoin-related ETFs in the world while the Cryptopunk NFT series is fetching traders millions of dollars.
The adoption of cryptocurrency on a wider scale does eventually hinge on clear regulations. But there have been promising signs of adoption in popular domains like:
Considering the star power of some of the brands that have adopted Bitcoin and other altcoins, the world now awaits to see which brands will follow suit in the years to come.
We briefly discussed how cryptocurrency is somewhat similar to stocks in that it can be bought and sold on an exchange. Unlike stocks, however, cryptocurrencies have multiple use cases.
Companies can tokenize their revenue in the form of equity tokens or offer services that can be redeemed using utility tokens like Cube’s Tikka Token. That’s not all.
Cryptocurrencies can become the de facto mode of payment for goods, services, and even salaries while it has created new wealth creation avenues in the form of mining and staking.
Unlike IPOs, the functionality that cryptos offer through an ICO or FLA is endless. Startups can use it to raise more money. The affluent class of investors can become angel investors or venture capitalists.
Other possibilities include (but are not limited to):
Or, certain tokens can remain purely speculative. While the possibilities are interesting, investors must be cautious of one important fact: nobody really knows much about crypto, even if they’re “experts”. You can consult a Cube Wealth coach or download a Cube Wealth App.
A cryptocurrency is a digital asset that can be used to trade and earn profits or to buy goods and services. Cryptocurrencies are built on the blockchain, which is a technology used to store data in a immutable way, meaning data on the blockchain can never be changed or modified but can always be accessed and verified.
You can buy cryptocurrencies from an crypto exchange just like stocks. Storing cryptocurrencies is generally done on a special "hot" (online) or "cold" (offline) wallet.
Most cryptocurrencies are decentralized meaning that no single entity has complete control over the creation or distribution of the asset. This is a contrast to how traditional currencies like the US Dollar work where a Central Bank has the right to completely control creation and distribution of the currency.
This is one of the biggest USPs of cryptocurrencies - allowing users to have control over their assets like never before. It is also worth noting that several cryptocurrencies have generated lucrative returns, a proposition that has brought millions of investors to the crypto space.
A cryptocurrency is a digital asset (coin or token) minted on the blockchain. It is decentralized and gives the owner complete control over their asset. Cryptocurrencies like Bitcoin and Ethereum have shown that they have real word value and, at the same time, can generate potentially high returns.
Other examples of cryptocurrencies include Polygon, which allows decentralized apps to be built using it, and Dogecoin, which is a P2P cryptocurrency used as an asset and for transactions.
Bitcoin is the oldest and the most valuable cryptocurrency in the world. That's why BTC has become synonymous with the term cryptocurrency. But the truth is, Bitcoin is just a cryptocurrency - there are nearly 10,000 other cryptocurrencies on the market as per recent stats. You can consult a Cube Wealth coach or download a Cube Wealth App.
Note: Facts & figures are true as of 16-11-2021. None of the information shared here is to be construed as investment advice. Exercise caution when investing in unregulated assets like cryptocurrency.
To sum it up, cryptocurrency represents a groundbreaking digital asset category that has challenged conventional financial systems and unveiled fresh avenues for decentralized, secure, and effective transactions. The fundamental blockchain technology, with its focus on transparency and security, underpins this financial innovation. Various cryptocurrencies such as Bitcoin and Ethereum have achieved widespread recognition and adoption. The outlook for cryptocurrency is brimming with potential for ongoing advancements and adaptability across various sectors, rendering it an indispensable subject for individuals intrigued by the continually transforming domains of finance and technology. As the cryptocurrency landscape continues its evolution, it is imperative for those venturing into this dynamic and rapidly changing financial sphere to remain well-informed and exercise prudence in their investments and transactio
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