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TradeGM Analysis
What is blockchain technology? Before we dig deeper into blockchain
As promised, we’re back to tell you more about trading cryptocurrencies. Following How to Trade Cryptocurrencies – Part 1, let’s move into the popular cryptocurrencies and how it all functions.
Why are they so popular?
Bitcoin was the world’s first cryptocurrency, and it paved the path for all the other cryptocurrencies. Initially, only crypto enthusiasts sought out cryptocurrencies. Still, it is now the end of 2020, and the rest of the world has caught up. For instance, Bitcoin is trading at around $15,000 at the time of writing.
They are a very secure medium of exchange because they follow a cryptography system. Cryptocurrencies are decentralized and therefore not controlled by any government or institution. Instead, they are based on blockchain technology. Cryptocurrencies are also public, meaning that you are able to access and use them without anyone’s authorization.
But above all, people favor them because analysts predict that cryptocurrencies will eventually take over fiat currencies. This is true more than ever now that we’ve got a pandemic on our hands. Banks are pumping money into the countries, causing fear of hyperinflation. People are looking to crypto now more than ever as a tool to help hedge against inflation.
Which are the most popular cryptocurrencies?
- Bitcoin
Bitcoin was the first cryptocurrency to come out, and it is still the forerunner in the market. People sometimes refer to it as ‘digital gold’ because its price has at points reached $22,000.
- Ethereum
It was released in 2015 by a Russian Canadian programmer and is the second-largest cryptocurrency by market capitalization. You can use Ether for decentralized finance as well as initial coin offerings (ICOs).
- Ripple XRP
It was launched in 2012, with the aim of enabling banks to settle fully trackable transactions in real-time, at a low-cost, globally. Ripple doesn’t require mining. Instead, the coins were pre-mined and can be released or taken off the market accordingly.
- Litecoin
People refer to Litecoin as ‘silver to Bitcoin’s gold” because it was one of the first currencies that followed Bitcoin’s footsteps. Litecoin offers faster transactions than Bitcoin, thanks to its block generation rate.
- Monero (XMR)
While all cryptocurrencies offer an element of privacy, Monero makes it its primary focus. It guarantees total privacy on the basis of a special technique called ‘ring signatures.’
How to trade cryptocurrencies?
At the time being, you can directly buy the tokens and trade them on platforms, or you can trade CFDs (contract-for-difference) with cryptocurrency as the underlying asset.
Purchasing cryptocurrency involves trading any given currency, such as USD, EUR, CHF, for a virtual one, such as BTC, XRP, etc. In the case of some cryptocurrencies, you can only trade one cryptocurrency for another and not a fiat currency. For example, when Wozniak’s currency, WOZX, made a debut, you first had to exchange a fiat currency for Tether (USDT) and then purchase WOZX with USDT.
CFDs allow you to speculate on an asset’s price movements (such as a cryptocurrency) without ever taking possession of it. If your speculation is correct, you make a profit; if it’s wrong, you lose.
Cryptocurrencies have a reputation for being severely volatile. They are susceptible to developments in the legal, political, and business sectors. You need to be aware of any developments that can affect the price of the tokens.
In our next bit on cryptocurrencies, we will take a closer look at blockchain.
