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Satoshi Nakamoto obviously had a holistic and long-term vision for cryptocurrency as it has continued to soar and live up to his name and has built a legacy against all odds. However, the market is quite a dynamic one that should be studied appropriately especially for “newbies” who have perceived it recently as a platform to invest money and trade or simply watch it grow over time.
The Trace Of Cryptocurrency
Actually, no one knows the inventor of cryptocurrency. Satoshi Nakamoto is simply a pseudonym that is believed to have been coined from the world’s renowned technology companies: SAmsung TOSHIba NAKimishi MOTOrolla.
In 2009, bitcoin was introduced as the first kind of cryptocurrency and was created as a means to correct the flaws of centralization in the financial system through the use of a decentralized financial system called the blockchain.
In this vein, digital currency is made available unlike centralized Fiat currencies.
The first-ever cryptocurrency to get recognized is Bitcoin which rose from 12cents to over $30,000. It is still the most valuable digital currency in the world currently followed by Ethereum which is worth over $3,000 till date.
Facts About Cryptocurrency
1. It Is Not A Legal Tender
Unlike Fiat currencies, cryptocurrency is not a legally accepted or recognized currency for transactions, taxes, or other legal payments. For example, the nationally recognized currency in the United States is the Dollar and the legally acceptable currency in Nigeria is the Naira.
2. There Are Over 5,000 Currencies
Day by day, newer cryptocurrencies built on the blockchain keep surfacing. We have numerous coins and altcoins; however, the top three coins on the chart are Bitcoin, Ethereum, and Dogecoin. So far; these coins are thriving and have recorded immense value.
3. No Third Party Access
Cryptocurrencies do not encourage third party access because it is not dependent on middlemen or intermediaries to thrive. This means that every crypto owner can manage his wallet. Unlike most financial systems that deal with Fiat currencies; they put in institutions like banks to act as a trusted third party between the ledger and the owner.
But which is actually safe? Having a trusted third party or managing your finances individually. It goes both ways. It all depends on the nature of the risk you are willing to take. For example, having a trusted party would require forfeiting extra charges and little fees that go into regulating your ledger; but not having a third party would require taking charge and total responsibility for your actions. For example if you lose the password to your wallet, you would not have a third party who can issue you another password or put a regulation on how to handle related cases.
However, the third party system would gradually begin to reflect in the digital currency system if it becomes a legally accepted currency and is being used at nationally recognized centers or institutions.
4. Volatile Value
People have been beneficiaries and victims of the volatility of cryptocurrency. There are numerous factors that influence the value of cryptocurrency. The main reason why the value hits highs and lows is that it is a digital asset; hence people can opt-in, back out and even trade their coins at different prices. Situations like this would definitely take the value of cryptocurrency really low. So the more people that opt in, the higher the value goes and vice versa.
5. Decentralized System
It is built on a platform called blockchain which makes it possible for operators to deal with one another comfortably on the platform without the involvement of a third party.
The chances of earning as high as 200% profit on your investment in cryptocurrency is very high due to its high value. It is a function of studying its highs and lows appropriately.
7. Not A Fiat Currency
Unlike cryptocurrency, Fiat currencies are government-issued and legally backed forms of currency eg Naira and Dollar. Hence, the government has control over it and can regulate its flow and distribution.
What Are The Greens And The Reds In Cryptocurrency?
The greens and reds are a metonymy and a reflection of the volatility of crypto. For the greens, it reflects profitability and an assurance that the market capitalization is favorable. Most times this is a result of having more numbers of investors on the platform. However, this is somewhat not a favorable time to buy due to its extremely high value. Buying a coin at its all-time high or at its “bullish” is not a financially informed decision.
For the reds, it reflects a “bearish” turn. This is a downward slope in the value of cryptocurrency. Most times a bearish pull happens when there is a widely spread misconception of cryptocurrency that has prompted wavering investors to pull out from the cryptocurrency platform or when investors begin to sell their coins at an unbelievably cheaper rate.
Nevertheless, the flip side is that the right time to buy is when it is in the dip. Buying at a lower value means that you could get more than a 100% profit when you sell at a much higher value if cryptocurrency eventually hits its “all-time high”.
Being evident that the crypto market is dynamic, it is important to study the nature of the market before investing. This would help you prepare adequately for the risks that come with its volatility.
The dos and don’ts of the cryptocurrency market are very simple.
Study cryptocurrency-related terms as this would help you understand concepts properly. Also, do not buy coins at their “all-time high”; buy them when they are low.
Above all, have an in-depth understanding of the market. For newbies, read books and articles that talk about the crypto market and apply the knowledge when you make investments on the platform.
This is important as you need to know that the market is not all “smiles and excitement.” There are times when you will experience the downsides of the market. When such ever happens, the confidence in the understanding of the market and the profitable times that lie ahead in the crypto market would keep you going!