Discussing Cryptocurrency | Insights, History and Analysis
Cryptocurrency is a digital currency which operates independently of a central bank, making it decentralized and therefore immune to government manipulation and interference. Nowadays Cryptocurrency is the best way for money transactions. But how did it become so popular? In this post I am going to share some information about Cryptocurrency.
Bitcoin is the first cryptocurrency. It was invented by Satoshi Nakamoto in 2009. Bitcoin is based on Blockchain Technology. Blockchain is a decentralized digital ledger technology that records crypto transactions. Bitcoin gained popularity in a very short time after its invention. Through this, money can be transacted securely anonymously. As a result there is no central authority for Bitcoin transactions such as the central bank or government. Because of this Bitcoin gained popularity overnight. This is how cryptocurrency started to spread across the world.
Through cryptocurrency not only money transactions but also different types of coins can be bought and sold here according to the market price. After the crypto ride started with Bitcoin, other types of coins entered the market. They win the hearts of traders with more variety of facilities. Ethereum is another popular crypto coin. It is better known for its smart contract functionality allowing developers to build decentralized applications (dApps) on top of its own blockchain. Vitalik created this in 2015, and unlike Bitcoin, it uses a different mining technology called Proof of Stake (PoS) to validate transactions. There are many other cryptocurrencies available in the market, including Ripple, Litecoin, Binance Coin, Cardano, Dogecoin, and Tether to name the populars. Each of these cryptocurrencies has its unique features and functions, making them suitable for specific use cases.
There are two types of cryptos in the market. A kind of being who are stable. And other types are volatile. Stablecoins are typically fiat currency like US dollars that are designed to maintain a stable value relative to a real world asset. Their principal does not rise or fall with the market's price action. However, many times these stable coins can become de-peg in the crypto market. Once de-peg is reached, the stablecoin loses its stability and its price starts to fall. Again, as a result, a FOMO (Fear of Missing Out) is created in the market. This causes holders to sell their coins and at some point the coin loses its balance. Some examples of stable cryptocurrencies include Tether (USDT), USD Coin (USDC), Hive Backed Dollars (HBD, Binance USD (BUSD).
Volatile cryptocurrencies experience wild and rapid fluctuations in their value through price action of the crypto market. These fluctuations can range from a few percentage points to several hundred percent in a single day. Volatility is a common behavior of most cryptocurrencies, and it is primarily driven by market demand and supply dynamics and regulatory changes of the crypto market. For example, we can see the volatility of Bitcoin. It's value fluctuating by 20/30% within a few hours. Nowadays crypto is now so risky to invest in since the prices can swing so wildly against the trader's prediction.
There are two markets to trade cryptocurrencies.
- Spot Market
- Futures Market
By spot trading, a trader can buy or sell a crypto coin immediately from the exchange. In other words, you can buy or sell cryptocurrency at its current price on spot market. This type of trading is usually made on exchanges that allow their user to trade directly with each other. On the other hand, futures trading is for the delivery of the cryptocurrency at a future date and a pre-determined price. A trader can trade either short selling or long buying in future markets. However, there are several complexities in the futures market. Here huge amounts of money are liquidated constantly. Again, there is extensive manipulation in this market. Generally, Anonymous Whales manipulate the market by liquidating short or long traders. Due to this, there is often a difference between the spot market price and the futures market price of the same coin.
Crypto traders typically buy and sell cryptocurrencies using exchanges platform. Cryptocurrency exchange allow their users to buy, sell or trade cryptocurrencies such as Bitcoin, Ethereum, Binance coin, Hive, Leo and more. In there a trader can exchange their cryptos in real time with other users around the world. There are two kinds of Cryptocurrency exchange available in the market. First one is centralized and the other one is decentralized. Centralized exchange are operated by a company or a individuals team. Decentralized exchange are running by a network of computers that are not controlled by anyone. Some centralized Cryptocurrencies exchange are Binance, Coinbase, Huobi, Bybit, KuCoin etc. On the other hand Trust wallet, Hive-engine, Token Pocket are some decentralized exchange.
Cryptocurrency is a broad topic. If you write about it, one topic after another will come out that will not end your interest. If you write about trading again, it will take a different turn. Trading requires a different mindset and strategy. But what I wrote above, these are actually basic discussions about cryptocurrency. Finally, there are a few things to keep in mind before diving into crypto. such as :
- Price Action
- Exchange
- Technical Analysis
- Fundamental Analysis
- Chart Pattern
- Ongoing event
And if you are new in this crypto world then don't join any project suddenly. Because there are many scam projects that have the trick of killing people's money. So beware of them. Before doing anything in the crypto market, do your research and seek expert advice.
As a crypto trader it's great to write articles about crypto. But this doesn't fill my mind. So I want to write articles again on some major topics such as Technical and Fundamental Analysis of crypto in the future. I hope you will benefit from this article. If you want to know anything from me, please submit your necessary questions in the comment box. I will try to answer your questions as best as possible. Thanks for reading my post for so long. Don't forget to let me know what kind of post you expect from me. Thanks everyone, goodbye.
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