What Is Cryptocurrency?

This is the digital currency that has been protected cryptographically. It is not like fiat currencies in the online world—cryptocurrency does not have a physical form, and that's what makes it different from fiat currency. Produced through a method called mining, there are many different types of cryptocurrencies on the Market today. Your government does not govern cryptocurrency, and the banks don't issue it. It is users like you who produce this currency using various methods known as proof of work, proof of stake, etc.

How Does Cryptocurrency Have Any Value?

One of the things that concern new crypto-investors is how cryptocurrencies can be of any value when any physical reserves do not back them. What they have to realize is that backing up cryptocurrencies with physical reserves will kill the purpose of their existence. However, you can take the example of a bank where you are served on a token basis. You go inside the bank, get a token, wait for your number, and when your number is called, you present the token and get assisted. Come out of the bank, and this token has absolutely no value. Try to approach the counter without the token, and the bank staff will not serve you.

So, within the premises of the bank, the token does have a value. Similarly, cryptocurrency developers and blockchain companies are trying to create a system within which their digital coins will have a value. Once this becomes international, cryptocurrency will have value in every part of the world and to make any transactions you can think of.

The Major Players

Of course, the biggest name in the cryptocurrency is Bitcoin—the first digital coins to be created in 2009. Satoshi Nakamoto is the genius behind bitcoin, but no one knows who Satoshi Nakamoto is. The next big player in the Cryptocurrency Market was Ethereum. Ethereum is not just a cryptocurrency but a platform upon which various blockchain solutions can be created. In that sense, Ethereum is considered safer and more future-proof than bitcoin. Some of the major players of the cryptocurrency world are as under:

• Bitcoin
• Ethereum
• Bitcoin Cash
• Ripple
• Litecoin
• Cardano
• Stellar
• EOS
• Monero
• Tron
• ICON
• Bitcoin Gold
• Dash

It won't be wrong to say that to this day; Bitcoin remains the representative of cryptocurrency market. When Bitcoin suffers, the entire market seems to suffer. Bitcoin is also the most valuable digital currency out there, currently trading at more than 8,452 USD. Here is a glance at the cryptocurrency market on February 8, 2018.

How to Invest in Cryptocurrencies

The most important thing that one needs to understand is how they can invest in cryptocurrencies. There are multiple ways to do that. First and the straightforward method is to buy a cryptocurrency and hold it while waiting for its value to rise. You can buy digital coins from cryptocurrency exchanges. There are different types of exchanges offering different levels of conveniences to their users. Some exchanges will allow you to convert your fiat currency into your desired digital currency whereas others will only accept another digital currency. In most cases, they will accept Bitcoin and Ethereum as they are the most well-known and stable currencies on the market.

Whether you have to option to convert your fiat money into digital currency or not also depends on the cryptocurrency you choose. The new and lesser-known cryptocurrencies cannot be bought with fiat currency most of the times. The well-known, established and old currencies are usually available to be bought using fiat currency.

The other, and potentially the more popular way of investing in 2017, is ICO – Initial Coin Offerings. ICOs are fundraising events launched by new blockchain based technologies to raise funds from crypto-investors from around the world to finance the materialization of their projects, marketing, and other processes. Some of the upcoming ICOs of 2018 are Globitex GBX, SocialMedia.Market, Crafty, YourBlock, Jury.online, etc.

Storing Cryptocurrencies

Before you can invest in the cryptocurrency market, you have to know the method to store your digital coins. When you buy cryptocurrency on an exchange, it still resides on that exchange. To make use of your bought coins, you have to get them in a wallet. You can use online, mobile, hardware or paper wallets. The main factor to help you choose the right wallet is the amount of security. Offline hardware and paper wallets are the most secure. The more a wallet is connected to the internet the less safe it will be considered.

A Bit about Cryptocurrency Market Movements

Cryptocurrency market can be quite scary for new investors. The main reason behind that is the volatility of this market—yes, it is one of the most volatile markets out there. For example, bitcoin, the most stable and powerful cryptocurrency out there, lost more than half of its value within a few days in 2018. However, an investor in the cryptocurrency market has to accept such volatility. Such dips should not scare crypto-investors, but they should know how to mitigate their risks when investing in digital coins.

Another thing that should help you invest in cryptocurrencies is to know the factors that affect cryptocurrency prices. First thing affecting the price of a cryptocurrency is the total number of its coins that can be mined. Take the example of Bitcoin. It is the most valuable and highly priced cryptocurrency out there because there are only 21 million bitcoins out there that can ever be mined. Secondly, it is the regulations from the governments that affect cryptocurrency prices. The huge dips in Bitcoin’s prices in 2018 have been a result of various governmental regulations and crackdowns on cryptocurrencies.