As of 2021, there are over 300 million cryptocurrency users in the world for thousands of different cryptocurrencies. Bitcoin was the first cryptocurrency, and was founded in 2009 by a group of unknown people who went by the name Satoshi Nakamoto and has since cemented itself as the most widely traded cryptocurrency in the world. If you’re new to this world, you may have several questions; what is crypto? How does it work? Is crypto taxed? What is crypto trading, and is it even worth it? These are some of the questions we hope to answer for you in this article.
What Is Cryptocurrency?
As opposed to traditional currencies controlled by a central authority, cryptocurrency is a form of decentralized digital currency designed to be a medium of exchange. Most cryptocurrencies are built on blockchain technology, a decentralized ledger maintained across a distributed network of computers. Since no central authority issues this currency, unlike fiat currencies like the euro or the US dollar, cryptocurrencies cannot be manipulated by governments. Since the advent of Bitcoin in 2009, there are now thousands of different cryptocurrencies in circulation.
How Does It Work?
Cryptocurrencies are generally created through a process called mining. This requires computers to solve complex mathematical problems, which in turn generates crypto. Cryptocurrency does not have any tangible form, and resides only on the internet. The value of a particular cryptocurrency depends on its supply and demand. You can buy it from brokers and keep or spend it using digitally encrypted wallets. Like other assets, crypto can be taxed, and the amount can vary depending on where you are.
What Is Crypto Trading?
Depending on its supply and demand, among other factors, the value of a cryptocurrency can either increase or decrease. Wagering on this fluctuation is known as crypto trading. For example, you can buy a particular cryptocurrency at a specific price if you think its value will increase, or conversely, you can sell it if you think its price will fall. In short, you take a financial position based on whether you believe the value of a currency will rise or fall. If you are correct, you end up making money.
Before getting into crypto trading, it is vital to do your research and thoroughly understand how the crypto market works and what factors cause the value of a particular currency to fluctuate so you can safely navigate the pitfalls of the market.
Why Is Crypto So Popular?
Cryptocurrency has risen in popularity due to factors stemming from its decentralized nature. Since governments cannot oversee or manipulate cryptocurrency, it can remain stable during times of economic crisis. As a result, they offer an attractive method for investors to secure their wealth. Additionally, crypto provides a relatively cheap, secure method to effectuate online payments. Due to its popularity, several crypto trading platforms have sprung up, offering crypto traders a secure platform to trade cryptocurrency and make profits.
Cryptocurrencies have tremendous potential and are seen by many people as the future of finances and investment. As crypto grows even bigger, there are bound to be new regulations, but its decentralized nature prevents too much interference by governments or other authorities. As a result, crypto promises an exciting future in economics and finance.