What is Cryptocurrency?

Cryptocurrency is getting widespread popularity in the present financial market. The token has moved the world one step ahead in the world of digital transformation.

It is considered as the future of currency by some famous personalities such as Bill gates. Now, some new individual may be wondering what this cryptocurrency is and how it is traded. So, the answer lies here in the article.

What is cryptocurrency?

Cryptocurrency can be considered a form of digital payment that can be exchanged on online platforms for goods and services. Many firms have issued their digital currencies often known as tokens, and these can be traded particularly for the services as well as goods that the firm provides. The mechanism of the entire currency depends on the blockchain technology, and it works in a decentralised manner. It means there is no involvement of government or banking institutions in issuing it. The whole transaction takes place with the peer to peer network of computers recording and managing transactions.

Word "Crypto" in cryptography reflects the method of using decryption and encryption techniques to secure transactions and communication in the presence of a third party having ill intent in their minds.

What makes cryptocurrencies special?

1) It is more or less the same to the real-world currency, but the main difference is that it does not have any physical embodiment.

2) There is no rigid limit on the number of units that can exist. With Bitcoin, this limit exists at 21 million.

3) The verification for the transfer of funds is easy and fast.

4) Operate independent of banks. Hence, it eliminates the main drawback of banks such as limited transaction, transaction failure and involvement of paperwork.

5) It allows new units to be added after some specific conditions are met.

6) There is little or no transaction cost in it.

7) One can access money 24/7

8) No hard-core limit on the withdrawal and purchases

9) Freedom for anyone to use

10) International transactions are faster than the normal one

What is Blockchain technology?

Blockchain technology is a decentralised system in which all transactions take place across a peer-to-peer network of computers. Using this technique customers can confirm transactions without the need for any central clearing authority such as government or banks. Its potential applications include settling trades, fund transfers, voting and many others.

Pros and cons of blockchain technology

Pros

1) Increased transparency

2) Accurate tracking

3) Permanent ledger

4) Cost reduction

5) Secure transactions and trading

Cons

1) Complex technology

2) Regulatory implications

3) Implementation challenges

4) Competing platforms

How many cryptocurrencies are there in the market?

There are more than 6,700 cryptocurrencies traded publicly in the international market. Along with this new cryptocurrencies pop up every single day. Facebook has recently issued its cryptocurrency with the name "Libra." The total net value of all currencies was more than $370 billion as per the data dated September 2, 2020, and the overall value of the most popular digital token, Bitcoin was estimated around $210 billion.

Top 10 trending cryptocurrencies by market capitalisation

Here is the list of top ten cryptocurrencies depending on their market capitalisation.

1) Bitcoin

Market Capitalization: $210.5 billion

2) Ethereum

Market Capitalization: $48.6 billion

3) Tether

Market Capitalization: $13.6 billion

4) XRP

Market Capitalization: $12.2 billion

5) Chainlink

Market Capitalisation: $5.1 billion

6) Polkadot

Market Capitalisation: $5 billion

7) Bitcoin Cash

Market Capitalisation: $4.9 billion

8) Litecoin

Market Capitalisation: $3.8 billion

9) Binance Coin

Market Capitalization: $3.5 billion

10) Crypto.com Coin

Market Capitalisation: $3.4 billion

Why are cryptocurrencies so popular among traders?

Cryptocurrencies attract many traders because of a variety of features it possesses. Here are some of the reasons for its popularity.

Traders see cryptocurrencies, especially bitcoin as the future of the currency market, so they run to purchase the token now, prior before they become more valuable.

Some traders like the fact that a central authority does not dominate these virtual currencies, since, over time, these banking institutions tend to mitigate the value of money through inflation.

Others believe that the blockchain technology behind cryptocurrencies makes it a secure platform for trading.

Cryptocurrency mining

Crypto mining or cryptocurrency mining is a method through which the transactions for different forms of virtual currency are added and verified to the blockchain digital ledger. It also refers to crypto coin mining or bitcoin mining (the most popular type of cryptocurrency) or Altcoins mining. This mining has surged both as activity and topic as cryptocurrency usage itself has risen exponentially in the past few years.

Every time a cryptocurrency transaction is done, a miner is responsible for guaranteeing the authenticity of data and updating the transactions on the blockchain. This process itself involves racing with other crypto miners to resolve a complicated analytical problem using the cryptography hash functions which are connected with a block containing the data of the transaction.

How to purchase cryptocurrencies?

The cryptocurrencies can be purchased either from exchanges such as Coinbase or form a well-regulated broker. Many brokers offer you these currencies, but the choice of broker entirely depends on you. So choose wisely, because there are many fraud brokerage firms around the globe whose main aim is to trap traders.

One of the authentic and trusted names in the broker list is ETFinance. It provides advanced MetaTrader 4 for trading. The minimum deposit for the broker is $250. The broker is highly regulated and authorised by the leading financial authority and trusted by the thousands of active traders.