In recent years, it has been possible to observe a great growth of people who talk about the opportunity to invest in cryptocurrencies. But do you really know what bitcoin is and how virtual currencies work?
This is a market that attracts small and large investors and, as it is something relatively new, there are still many doubts. And it will be more and more common to hear about digital currencies, see?
The best way to find out more about it is to get informed. So, understand what bitcoin is, how cryptocurrencies work, and which ones are most valued.
What are cryptocurrencies?
Cryptocurrency is what digital currencies that are decentralized are called. That is, they are created from advanced systems that use cryptography to secure transactions and utilize a blockchain network. In this way, the data of the person making the transaction is preserved.
They are called virtual currencies because they only exist on the internet. So we can’t take them into our hands. Technology is a great ally, and security is paramount. It is even the use of encryption that makes any type of fraud difficult.
What is bitcoin?
Bitcoin is the most famous among the existing cryptocurrencies, so much so that many people confuse and call cryptocurrencies bitcoin. However, it is yet another digital currency that does not need a third party to function.
Because it is decentralized when you buy a bitcoin the money is entirely yours. Bitcoin is famous for being the first cryptocurrency in the world, created in 2008 from a decentralized network. One of the features is that bitcoin is limited: only 21 million coins can be issued.
What are the advantages and disadvantages of cryptocurrencies?
The first aspect that we must address is that cryptocurrencies work like the stock market. If demand is high, the value goes up — but if demand is low, the price goes down.
Another point that causes fluctuation in values are statements – such as those of the Chinese government, which wants to ban the country’s assets – or those of the owner of Tesla, an electric car company – which is one of the biggest encouragers of cryptocurrencies.
In addition, a feature that generates distrust is the fact that digital currencies are decentralized – which does not require regulation by banks, corporations, or governments. In this sense, many people feel a greater distrust and fear of investing in the cryptocurrency market.
So it is not recommended to invest all the money you have saved in them.
Even with these aspects that don’t seem so reliable, bitcoin has good advantages. Digital currency is an interesting investment for those who want to create diversified wealth without being dependent on banks, brokers, and stocks.
Check out other benefits of investing in this digital currency:
- fees are lower;
- there is more freedom of payment;
- transaction privacy is greater.
Which cryptocurrencies are on the rise?
As much as bitcoin is the best known among virtual currencies, know that there are other options as well.
More than 12,000 digital currencies are currently available. Some of them have greater potential and are experiencing high growth. The ones that show the most promise are:
- Ethereum;
- Binance;
- Tether;
- DOT;
- Ada;
- SUN;
- avax.
Knowing what bitcoin is and how this market works is the first step to start diversifying investments. And now that you know more about digital currencies and how they work, what do you think about starting to invest in this market?
Thanks for reading this article by ExtNext, hope you will learn something about Bitcoin and other cryptocurrencies
