What actually are cryptocurrencies anyways?
Cryptocurrencies, or just cryptos, can allow you to buy and sell anything from goods and services, to speculation for profits.
A cryptocurrency is basically a currency that has become digital. Similar to fiat money it can be used for any regular purchases, but cryptos use an online ledger with a strong encryption called cryptography that secures the online transaction.
However these digital currencies are not just used to purchase of goods and services like we mentioned, the biggest portion of activity is simply speculation where people are buying and selling to chase profits.
If you’re also looking for a place to get your hands on some crypto – definitely check out our article on the best bitcoin trading platforms.
Are there many different cryptocurrencies?
You bethca. Right now there are close to 7000 different cryptocurrencies out there. And while quite a few has come and gone, there are continuously new currencies that are becoming available.
The expected total value of the crypto market in 2021 has been anticipated to be over 2 trillion USD. The biggest chunk of that belonging to bitcoin with a value of over 1 trillion USD. That’s a lot.
When did all of this become so popular?
Cryptocurrencies have become so popular for a wide variety of reasons. But amongst the top ones, particularly amongst the eager bitcoin supporters, is that many see them as the currency for the future. And if bitcoin is the future and becomes the way we buy and sell things, the value of bitcoin is sure to increase. This is the argument a lot of people use when buying and holding cryptos, not just bitcoin.
Similar to being the potential future of currencies, people in support of cryptos also see them as an alternative to central banks. Particularly as these governing banks often will reduce the value of money by printing additional fiat currencies and causing inflation.
Should I invest in crypto currencies?
Investing into crypto is often seen of as a more speculative play compared to a more traditional investment like buying a house. So in order for you trade or investment to make pay off, you need the asset to increase in price. In other words someone has to buy it after you.
So always do your dure diligence before investing, and of course get a better understanding of how everything works by signing up and trading on our crypto trading simulator.
You can also read our additional article that covers investing in cryptos or investing in bitcoin.