In the year when currency variations globally suffered because of the current pandemic – coronavirus, digital currencies managed to register a surprising comeback and meteoric rise. The cryptocurrency value flowed more than 200% in 2020, capturing the attention of many people, investors, and institutions. Most people have invested a lot of cash into digital currency, hoping that it will continue rising in value.
In addition, digital currency is usually used with the integration of blockchain technology so as to offer decentralized, reliable, and secure transactions. Unlike local banks, cryptocurrency uses a lot of cybersecurity practices such as using encrypted wallets combined with 2FA, securing the internet connection with a VPN, and storing private keys offline, allowing investors to minimize cybercriminals’ chances of spying on their everyday crypto-related activities.
While there are a lot of cryptocurrencies available, both seasoned and beginner cryptocurrency investor at least know one of the following cryptocurrencies:
- Bitcoin
Bitcoin (BTC) was created in 2009 by an unknown individual using the alias Satoshi Nakamoto. Transactions involving bitcoins are anonymous are made without intermediaries or brokers. Bitcoin is also decentralized – meaning that a government or bank controls it. The total market value of bitcoin is worth more than $1 trillion after its price doubled this year to $58,857.
Bitcoin is also 100% digital. Marketplaces referred to as bitcoin exchanges allow individuals to sell or buy bitcoins using various traditional currencies. Coinbase is basically the leading bitcoin exchange, along with Gemini, Coinmama, and CEX.IO. With Coinbase, you will have to open an account and link it with your credit card or bank account. However, bitcoin is not yet accepted in most countries, and in some nations, the use is still illegal. While most businesses allow international payments in bitcoin from clients, there is no assurance that customers are willing or able to use the currency.
- Ethereum
Vitalik Buterin, the founder, first published the Ethereum blockchain in a whitepaper. Majorly designed to run code across decentralized computing platforms, the currency can transfer value like Bitcoin. As of April 2019, the cryptocurrency has the second biggest market value of around $16.3 billion. To sell or buy the cryptocurrency, you will have to look for an Ethereum exchange. When you choose an exchange, it is vital to differentiate between three exchanges, including P2P marketplaces, trading platforms, and brokers.
Platforms, such as Binance, have written their terms of use that the obligation lies with the clients to comply with various requirements for using the trading platform in their jurisdiction. Some platforms, such as eToro and BitMEX, don’t allow residents of Canada, Sudan, and Cuba. In contrast, Coinbase allows Australia, Cyprus, New Zealand, France, Belgium, and Croatia, just to name a few.
- Ripple
Ripple (XRP) got released in 2012 after Jed McCaleb and Chris Larsen of OpenCoin founded it. The currency is categorized as a blockchain-based platform or cryptocurrency, though neither of these is. Although it shares some similarities with cryptocurrencies and blockchain platforms, including Bitcoin and Ethereum, it has a unique difference, setting it apart. As of August 2019, XRP currency was the 3rd largest cryptocurrency with a market cap of around $13.4 billion, following BTC and ETH.
Many exchanges, which trade the currency are limited to crypto-to-crypto transactions. This basically means that you may trade the cryptocurrency with another, and not fiat currencies, like the dollar or euro. You will have to acquire the currency you want to trade with Ripple on a platform allowing fiat, and immediately this happens, you may proceed to trade the two currencies. Some of the great platforms, which provide XRP trading include Swapzone, Bittrex, and Changelly, just to mention a few.
- Litecoin
Litecoin (LTC) was created in 2011 by Charles Lee as an alternative cryptocurrency. Similar to Bitcoin, LTC depends on an open-source global payment network, which central authority doesn’t control. LTC differs from BTC in aspects, such as using Scrypt and faster block generation rate as a work of scheme. Today’s price is around $263, with a 24-hour trading volume of approximately $6 billion. The current ranking is #9, basically with a live market cap of $17 billion US.
Trading LTC is done through brokers or exchanges. Both can speculate either a price increase or decrease. This type of trading is done with a shorter turnaround with HODLing. When trading this, you will not own the underlying asset. Rather, you will speculate on the cost movements through CFDs (contracts for difference). If you aim to spend your LTC, there are some places you may go to. According to Litecoin merchant’s heatmap, most LTC investors are located in Europe and the US. Though there are is still a few in Indonesia, Asia, and India.
- Cardano
In 2014, Charles Hoskinson left Ethereum’s project and started working on Cardano (ADA) so as to address a lot of shortcomings he had observed in ETH. These limitations are grouped into governance, scalability, and interoperability. The current ranking is #6, with a market cap of around $42 billion.
If you want to trade in ADA, you must open a Cardano account with a broker, supporting the token. Opening an account with brokers is simple. To start, you need to gather some personal details, including your current address, phone number, and full legal name. Coinbase is among the biggest cryptocurrency trading, allowing investors to exchange currencies, including Cardano and Bitcoin. Coinbase makes it uniquely easy to sell and buy ADA pairs. You may even earn rewards through Coinbase Earn feature. Other trading platforms you can use to sell and buy Cardano are eToro, Coinmama, and Crypto.com.
In a Nutshell!
Cryptocurrency is a perfect digital asset for investment. A few cryptocurrencies have good options for investing in 2021.
Although you are free to choose any cryptocurrency of your choice to invest in this year, it is important to remember diversifying and working with dependable brokers and exchange services to protect your investment from fraud. Ensure to also include cryptocurrencies in your asset portfolio as soon as possible.
Disclaimer: This content does not necessarily represent the views of IWB.