What's all the hype about 'Cryptocurrency'? Why is everyone talking about it? YOU ARE NOT ALONE! Here's everything you need to know to jump on the Cryptocurrency bandwagon.
Despite being a relatively new technology, cryptocurrency has the potential and is worth learning more about. According to cryptocurrency statistics, it is estimated that in 2022 alone, more than 300 million people will be using cryptocurrency worldwide.
Cryptocurrency is becoming popular as an investment, with people buying it for short- and long-term purposes. Cryptocurrency is also becoming mainstream, with more businesses and organizations beginning to accept it as payment.
What Is Cryptocurrency?
Cryptocurrency is a digital or virtual currency that uses cryptography for security. A cryptocurrency is difficult to counterfeit because of this security feature. An organic nature is a defining feature of a cryptocurrency and arguably its most endearing allure. It is not issued by any central authority, rendering it theoretically immune to government interference or manipulation.
How Does Cryptocurrency Work?
Cryptocurrency is a digital asset that uses cryptography to secure its transactions, control the creation of new units, and verify the transfer of assets.
Cryptocurrency works by harnessing the power of cryptography, a technique used to protect information from unauthorized access. Cryptocurrency further uses a technique called Blockchain technology.
The blockchain is a digital ledger of all cryptocurrency transactions. It is constantly growing as "completed" blocks are added to it with a new set of recordings. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data.
Blockchain technology is hence a distributed database that is used to record transactions. Cryptocurrency uses a peer-to-peer network to validate transactions. This means there is no need for a central authority to approve transactions.
Breaking The Jargon Of Cryptocurrency:
Whether you choose to invest or not, understanding the crypto jargon is important because it is the common crypto-lingo used by most people who trade cryptocurrencies around the globe.
Here is a list of some of the common Crypto jargon explained:
Diamond Hands
— When an investor has "diamond hands," they are committed to holding onto their assets even when prices are falling. This demonstrates a strong belief in the future success of the investment.
Paper Hands
— An individual with little to no experience in stock or cryptocurrency trading may sell their assets too early, foregoing potential profits. These are individuals with paper hands.
HODL
— It's common for investors to "HODL" onto their assets, especially when it comes to volatile markets like cryptocurrencies. The term originated back in 2013 on a Bitcoin forum, where someone accidentally misspelled the word "hold" as "HODL." Since then, it's become shorthand for anyone who intends to hang onto their crypto or stock investments.
Whale
— A whale is an individual who owns a large percentage of a specific cryptocurrency.
To The Moon
— A stock or crypto that goes "to the moon" indicates its price will rise to make investors unlimited profits.
When Lambo
— "When Lambo" (Lambo, shortened form of Lamborghini) is the lingo used by some crypto-investors asking when cryptocurrencies will become highly profitable so that they can cash them in for luxury cars.
Mooning
— It is generally believed that a stock or cryptocurrency has reached its peak when it is said to be "mooning." At such times, the price of a stock is typically above the normal range of trading prices.
Bagholder
— Those who continue to hold onto their crypto-assets even when the Cryptocurrency goes down in value are known as "bagholders."
Pump and dump
— Pump and dump schemes are illegal attempts to artificially drive up the value of a stock or cryptocurrency to sell it at an inflated price.
Buy The Dip
— "Buying the dip" is what cryptocurrency investors are bound to do when a stock that is expected to rise suddenly drops in price.
Characteristics Of Cryptocurrency:
Transferability
— Cryptocurrencies offer a convenient way to conduct transactions with people worldwide, providing the same level of ease and efficiency as using cash at your nearest convenience store.
Privacy
— When paying with cryptocurrency, you can avoid sharing unnecessary personal information with the merchant. This helps protect your financial information from being shared with third parties like banks.
Security
— Almost all cryptocurrencies are secured by a technology called a blockchain. A large amount of computing power constantly verifies this technology to ensure accuracy.
Portability
— Cryptocurrencies are not subject to the same regulation as traditional financial assets and can be accessed from anywhere.
Transparency
— Every transaction related to Cryptocurrency is published publicly, leaving no room for manipulation of transactions.
Irreversibility
— Unlike traditional payment, cryptocurrency payments are irreversible.
Top Five Cryptocurrencies As of April 2022
We understand that choosing one out of many cryptocurrencies can be overwhelming, particularly for Crypto-newbies.
To help you set your foot in the Crypto-World, here is a list of five out of ten top-performing cryptocurrencies published on Forbes, based on their market capitalization as of April 2022:
Bitcoin (BTC)
— Bitcoin (BTC) was created in 2009 by someone using the pseudonym Satoshi Nakamoto. Bitcoin is the original cryptocurrency.
Ethereum (ETH)
— Ethereum is a popular cryptocurrency and blockchain platform among developers due to its potential applications.
Tether (USDT)
— Unlike other cryptocurrencies, Tether is a stable coin backed by fiat currencies like the US dollar and the Euro. That means it is not subject to the volatility of crypto markets.
Binance Coin (BNB)
— Binance Coin is a cryptocurrency that can be used to trade and pay fees on Binance, one of the largest crypto exchanges in the world.
U.S. Dollar Coin (USDC)
— Ethereum-based stable coin USD Coin (USDC) can be used for global transactions, similar to Tether. USDC is also backed by fiat currency, providing stability for investors.
Is Cryptocurrency A Good Investment?
Some experts believe it is a good investment, while others believe it is risky. It all comes down to whether you believe you will be able to earn back your initial investment or not.
However, you can't handle it without taking a risk when it comes to investment. If you're ready for the risk, take calculated risks.
