A lot of virtual purchases are made on the Internet every day, which greatly facilitates the task for consumers. They no longer have to travel to buy products. Since the advent of cryptocurrencies, buying and selling over the internet just got easier. This is mainly due to the fact that this digital currency is completely independent of banks and other financial institutions. Despite the plethora of articles on the subject, many people still have important questions about this type of currency. These questions mainly revolve around the benefits and risks associated with this type of currency. Is it really worth investing in cryptocurrencies? Here are some things you absolutely need to know before investing your money.
Different types of cryptocurrency
A little over 10 years ago, the first cryptocurrency appeared. It has met with tremendous success in the trading world and has been adopted by experts from the world of finance. Thanks to its success and usefulness, other types of cryptocurrency have also been created over time.
Bitcoin can simply be defined as a type of virtual currency, which therefore does not physically exist. It was developed in 2009 by Satoshi Nakamoto, an individual or group of individuals whose true identity no one knows until now. It is used for the exchange of goods and services in systems where it is recognized and accepted.
Bitcoin is an independent currency in the sense that it is not subject to any control by a monetary authority. It is also very accessible because you can have a bitcoin address without administrative protocols and it is anonymous since a user can have several bitcoin addresses. The total number of available bitcoins is 21 million.
Etherum was created in 2013 by a young programmer named Vitalik Buterin. Other people worked on the project with him and then became co-founders. They are Anthony Di Iorio, Charles Hoskinson, Joseph Lubin and Gavin Wood. Since its creation in 2013, etherum has evolved a lot to find a place in the trading world and it was in 2016 that the price of ether experienced its first growth. In 2017 it made its first entry on the trading platforms and its price increased by $ 1 in 2015 to $ 400.
It is important to specify that ether is etherum’s cryptocurrency as ether is used to trade on etherum’s network. The main feature of the ether is that its annual monetary emission is fixed and low. In fact, very few new ethers are created every year, but the ether has no absolute limits. Ether to work uses the blockchain which is a distributed database, which stores all transactions made with ether.
Binance Coin (BNB)
Binance Coin (BNB) is a cryptocurrency issued by the Binance exchange, which is the largest cryptocurrency exchange in the world. This platform was created in 2017 thanks to the fundraising aimed at cryptocurrencies (Initial Coin Offering-ICO), which generated 200 million tokens. The value of a BNB token is € 19.87 and 155 million tokens are available. BNB has several uses. In fact, it allows you to pay for travel, buy virtual gifts, get rewards, lend money, pay transaction fees …
Founded in 2014 by three developer friends, this cryptocurrency is of the stablecoin type and is put into circulation by the company Tether Limited. Its price closely follows the value of the US dollar and its value is 1 dollar. Stablecoins are blockchain tools whose value is anchored to a real asset such as the US dollar as in the case of tether.
The creation of this currency solves two main problems faced by cryptocurrencies. The first of these is the very high volatility of the performance of these currencies, which can be quite risky for their holders. The second is that of the interchangeability between common currencies and cryptocurrencies. Thanks to the stability of stablecoins, tether solves the problem of cryptocurrency volatility.
The advantages and disadvantages of cryptocurrencies
Cryptocurrencies have revolutionized the financial world and consequently the world of commerce and various financial transactions. Due to the way they operate, traditional financial institutions may become obsolete. Cryptocurrencies seem to be a real boon. But do they only offer opportunities? What is the other side of the coin you need to know before deciding to invest in cryptocurrencies?
The advantages of cryptocurrencies
There are several types of cryptocurrencies with well-defined characteristics. But if they have one thing in common, it is the fact that they are not fixed, which means that their value can increase at any moment. They can therefore bring you a lot of money if you know when to invest in them. Cryptocurrencies also renounce all administrative constraints imposed by traditional financial institutions. Plus, they’re accessible no matter which part of the globe you are in.
They are also available 24 hours a day. At any time, you can buy, sell and trade cryptocurrencies. Furthermore, the blockchain that is used to store all cryptocurrency data is secure so that all transactions made can be tracked. Since these digital currencies are not tied to any other, but rather dependent on the dynamism of the sector, they greatly facilitate the fight against inflation.
Finally, thanks to cryptocurrencies, currency exchanges can be carried out more easily and at lower costs. Cryptocurrencies, in fact, can be bought with the US dollar, the European euro, the Japanese yen, the Indian rupee, the British pound … Cryptocurrency exchanges can then be used to convert currencies.
The disadvantages of cryptocurrencies
Cryptocurrencies offer their users a very high level of privacy. They are therefore sometimes used to carry out illegal transactions. Some people use it to buy drugs and other illegal substances. Other people launder their illegally acquired assets using cryptocurrencies.
Also, during a funds transaction error, the coins are not returned to the sender. Some users take advantage of this system error to steal. We can also point out that understanding cryptocurrency jargon isn’t easy. The world of cryptocurrencies is not accessible and becoming familiar with its terms takes time and effort.
Furthermore, instability in the flow of cryptocurrencies can pose a high risk of loss for investors. Finally, investing in cryptocurrencies can be fatal for beginners. In fact, hacking, phishing, and all other similar techniques are ways to steal resources.
It is therefore necessary to invest in cryptocurrencies after having sufficiently informed yourself and having done all the necessary research to protect your assets. It is not advisable to embark on this opportunity as a miracle solution for making money, but as an investment in a complex, volatile and risky market. It is only with this attitude and this state of mind that disastrous losses can be avoided.