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Author: bmotrader   |   Latest post: Sun, 21 Feb 2021, 8:10 PM

 

What You Should Know About Common Types of Cryptocurrency

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Cryptocurrencies have grown widely popular over the past few years, and they have completely transformed the fintech and e-commerce industries. They have also made online shopping much easier for many people as these digital currencies can be used to buy several goods and services. To secure these online transactions, cryptocurrencies use an online ledger with robust cryptography. On the other hand, most people invest in cryptocurrencies to trade them for profit. Cryptocurrencies work through a decentralized technology called Blockchain that manages and records transactions. Read on to find out more about the common types of cryptocurrency and the things you should know about them.

Why Are They Popular?

Cryptocurrencies are very attractive financial investments for various reasons. Many trust that they will be the currencies of the future and are rushing to purchase them before their values increase more. It is also believed that cryptocurrencies are interesting replacements for central banks as central banks wouldn’t be in charge of the money supply and thus, preventing them from decreasing the value of money through inflation. People also believe that because they are backed by Blockchain, cryptocurrencies are much more secure alternatives than traditional banks.

 

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Types and Value of Cryptocurrencies

According to market research, there are more than 6700 cryptocurrencies being traded publicly today. Cryptocurrencies raise money through ICOs (initial coin offerings), and they continue to grow in value. As of January 27th, 2021, the total value of all cryptocurrencies reached more than $897.3 billion. Bitcoin, the most popular cryptocurrency out there, is valued at more than $563.8 billion. There are also several cryptocurrency exchange platforms in numerous countries, including Canada, and according to a legitimate Ethereum exchange platform, Ethereum is currently ranked as the second-best cryptocurrency in the world with a total value of $142.9 billion.

How to Buy Cryptocurrency?

Many cryptocurrencies are available for purchase in US dollars. However, others require purchasing them using bitcoins or other types of cryptocurrency. You also need an online wallet that can hold your currency so that you can buy a cryptocurrency. Typically, an account must be created to allow you to transfer real money to buy cryptocurrencies. There are many popular cryptocurrency trading exchanges that will allow you to create a wallet, and buy and sell cryptocurrencies. There are also several online brokers that offer cryptocurrencies, and ones that offer free cryptocurrency trades.

Protection

Before buying a cryptocurrency, make sure to search for a company with a reputable and well-known owner. Look into whether any major investors are investing in this cryptocurrency, and know if you will own a stake in the company or just have the currency or tokens. Stakes guarantee participation in the company earnings, while currency and tokens just signify that you are entitled to use them. In addition, search for a company that has been running for at least a few years to decrease the risks.

The popularity of cryptocurrencies has been steadily increasing for the past few years. Many investors believe that they will be the currencies of the future and predict that their values will skyrocket in the near future. However, other people view cryptocurrencies as mere conjectures. Regardless of what you hope to achieve with cryptocurrencies, make sure that you take precautionary measures to minimize your risks.

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