Cryptocurrency in its simplest form is digital currency that can be exchanged for goods or services, or can be traded for a profit or loss. If you’re new to cryptocurrency, there is a lot of information to absorb. So we will cover the basics first, what it is, how to buy it and the best ways to insulate yourself from losses.
The investment information provided in this article by bitgraph.network is for educational purposes only. Always do your own research and never invest more than you can afford to lose.
Simplistically speaking, cryptocurrency is similar to conventional fiat currencies such as the euro and dollar, but in digital form. It can be used to buy goods or services, or traded for a profit or a loss, depending on your timing of the sale. It consists of an online ledger that uses cryptography in order to make transactions safe and secure for all parties. It is a trustless transaction mechanism as no single authority or governing body has authority over the system, unlike third-party trust systems such as VISA, MasterCard or the banks. Transactions are verified across a decentralized blockchain that is accessible to anyone via a public ledger which shows the sender and receiver’s public account addresses/transaction details, without revealing each parties personal information or data. This decentralized technology provides security for all users.
What is the cryptocurrency market?
As it stands, the cryptocurrency market is unregulated. It is not controlled or governed by any centralized bodies. It empowers people to control their own money, without the macroeconomic forces of inflation or poor governance policies that can reduce your wealth. In fact, many cryptocurrencies are actually deflationary by design. This is achieved by limiting the total supply of the currency, which cannot be altered at a later date. Bitcoin for instance, has a total limited supply of 21 million coins and as such it is not affected by inflation. This is the biggest problem with fiat currencies such as the euro and dollar, since any central bank or government can simply print more money if they want to, which reduces the value of the currency by extension. In this regard, Bitcoin is considered “digital gold” since like gold it has a limited supply. This is why more and more people are choosing to protect their wealth by diversifying into cryptocurrencies and taking advantage of cryptocurrencies deflationary characteristics.
It is worth noting that not all cryptocurrencies are deflationary. The popular cryptocurrency Dogecoin for instance has unlimited supply so it is susceptible to inflation, making it a risky and poor investment choice compared to the alternatives. Choosing the right cryptocurrencies for your portfolio, for example Chainlink price prediction 2030, along with diversifying the cryptocurrency assets you hold to reduce risk is an essential element of protecting your investment.