What is Cryptocurrency: What You Need to Know Before Investing?

What is Cryptocurrency? - A cryptocurrency is a digital currency. It functions as a currency as well as a virtual accounting system. It allows a person to make payments directly to another person through an online system or digital wallet. Cryptocurrency is a system of digital payment that doesn’t depend on third parties like banks, to verify transactions. It enables anyone to send and receive payments anywhere. It only uses encryption to verify transactions, which provides security and safety.

Is Cryptocurrency Legal?

Cryptocurrencies are not issued by public or private entities. Its legal status varies from country to country. According to the Library of Congress, an absolute ban on trading or using Cryptocurrency applies in nine countries and an “implicit ban” applies in another 39 countries. Advertisements of cryptocurrency have been banned on Google, Twitter, Facebook, Snapchat, Linkedin, and Mailchimp.

Bitcoin and other cryptocurrencies are regulated by a federal and state-level assortment of rules. The U.S. has developed a patchwork of cryptocurrency regulations in recent years, with legislators at both the state and the federal level taking turns tackling specific areas of the industry.

History of Cryptocurrency

• 1990: David Chaum had the idea of bringing Electronic Cash into the market, and implemented it through his company DigiCash. But the idea failed and the company went bankrupt.

• 2008: Satoshi Nakamoto is the pseudonym for the person or a group of people who published "Bitcoin: A Peer-to-Peer Electronic Cash System" who created Bitcoin12. Nakamoto mined the first Bitcoin Block of the blockchain also known as the Genesis Block.

• 2009: On January 12th,2009 the first Bitcoin was purchased by the computer scientist Hal Finney.

• 2010: The First ever Commercial transaction was made to buy two pizzas for 10,000 BTC. This transaction showed the potential of cryptocurrencies as the medium of exchange.

• 2014: Many major companies like Overstock.com began accepting Bitcoin for payments. Ethereum was introduced by Vitalik Buterin as a new platform for decentralized apps also known as dApps using a crypto called Ether (ETH).

• 2017: the cryptocurrency market experienced major growth and expansion worldwide with Bitcoin ranking highest, while many other cryptocurrencies losing their values. Despite all the highs and lows, Many major corporations and financial institutions’ interest in cryptocurrency and blockchain increased and began exploring more blockchain solutions.

• 2020: Due to Covid19 pandemic, digital transactions with cryptocurrencies increased rapidly. Bitcoin(BTC) skyrocketed to an all-time high of $64,000. Non-Fungible Tokens (NFTs) became the new talk in the market representing ownership of unique digital items.

• 2022: Major companies like Tesla and other Financial Institutions started showing interest in Web3.0, metaverse, blockchain technology and cryptocurrencies. The market faced another downturn but innovation continued to rise.

Pros and Cons of Investing in Crypto

Pros

1. The Economical and faster money transfer and decentralized nature makes crypto currencies popular in investors.
2. The money transfer transactions can be easily viewed by using block chain explorer.
3. Crypto currencies can be easily purchased using currencies like U.S.dollar, Indian rupee European Euro.
4. Cryptocurrencies can help transfer funds globally easily without any third party involvement.
5. Investment in cryptocurrency can generate huge profits.
6. Accessibility is easy as you just need a computer or smart phone with internet connection for transactions.

Cons

1. Investing in crypto currencies might seem very profitable and attract the investors but there are few downsides to it.
2. Price Volatility high energy consumption for mining and facilitating criminal activities make it bad for public.
3. The majority of bockchains work on POH proof of work.
4. Lack of policies for transactions is a major drawback of cryptocurrencies.

Top 5 Cryptocurrencies Trending in 2024

These are the top 5 Cryptocurrencies ruling the market:

1. Bitcoin (BTC)

Bitcoin was first introduced in 2009 in the market by an unknown person or group of people using the name Satoshi Nakamoto. It became the most well-known and largest cryptocurrency in the world with a Market Capitalization of $1.4 Trillion. Bitcoin is a public blockchain you use to create and manage. Its rise and popularity inspired many cryptocurrencies worldwide. It has the highest year-over return of 111%. One bitcoin is divisible to eight decimal places (100 millionths of one bitcoin), and this smallest unit is referred to as a “Satoshi”. If you own a Bitcoin, you use smaller portions of Bitcoin in your digital wallet for making transactions.

2. Ethereum (ETH)

Ethereum is an open-source blockchain that is known for its smart functionality compared to Bitcoin. It is a global decentralized software platform powered by Blockchain Technology. It is designed to be secure, programmable, and decentralized at the global scale. The Ethereum platform was published by Buterin and Joe Lubin in 2015, who is also the founder of ConsenSys (Blockchain Software Company). It has a Market Capitalization of Over $456.2 Billion with a 78% Year-over-year return.

3. Tether (USDT)

Teather is a stablecoin, owned by iFinex Company located in Hong Kong which also owns crypto exchange BitFinex. Tether is the World's Third Largest Cryptocurrency after Bitcoin and Ethereum. It has a Market Capitalization of $100.2 Billion. Tether can be purchased through crypto exchanges or from apps like Kraken or Coinbase.

4. Binance Coin (BNB)

Binance Coin is the cryptocurrency issued with the BNB symbol launched by the Binance exchange. Binance was created for discounted trading fees in 2017, but now it is used for various forms of transactions like travel booking, entertainment, online service, etc on numerous applications. The Binance Blockchain is created using Ethereum. It has a market Capitalization of Over 62 Billion.

5. Solana (SOL)

Solona was designed in 2017, to host decentralized and scalable applications. It is an open-source project owned by Solona Foundation based in Geneva. Selena is known for its low transaction fees and can run many transactions quickly and easily. In 2021 Solana(SOL) scored almost 12,000% and has a Market Capitalization of $75 Billion. By the end of 2023, Solana processed over 253 Billion Transactions with an average cost of $0.00025 per transaction.

Conclusion

Investing in cryptocurrency can be a rewarding but challenging endeavor. The key to success lies in thorough research, understanding the risks involved, and staying informed about market trends. By diversifying your investments and keeping an eye on regulatory developments, you can navigate the volatile world of crypto with greater confidence.

The top five cryptocurrencies trending in 2024—Bitcoin, Ethereum, Binance Coin, Cardano, and Solana—each offer unique features and investment potentials, making them worthy of consideration for any crypto portfolio.

As with any investment, it's crucial to approach cryptocurrency with caution and to only invest what you can afford to lose. With the right knowledge and strategies, you can make informed decisions and potentially benefit from the exciting opportunities that the world of cryptocurrency has to offer.