Cryptocurrency Exchanges: How to Invest in Crypto
First, we had the digital wallet hysterias, then the cryptocurrency fever and now we have crypto-exchanges to legitimize this new form of digital currency! If the popularity of crypto keeps on escalating like this, are we really going to go cashless in the future? Will we all be talking about Bitcoins, Ethereums, and Ripples with our friends while buying coffee digitally? Stay tuned to find out…
By The Way, What is Crypto and How to Invest in Crypto?
In case you forgot, Cryptocurrency refers to both digital currencies and a peer-to-peer payment system. These digital currencies are therefore virtual currencies in the sense that they are characterized by an absence of physical support: no coins, no notes, and payments by check or credit card are not possible either.
These are alternative currencies that are not legal tender in any country in the world. Their value is not indexed to the price of gold or to that of conventional currencies, nor are they regulated by a central body or financial institutions. There are no central banks in their heads. And yet, security and transparency are their main assets! Indeed, cryptography secures transactions that are all verified and recorded in a public domain, ensuring both confidentiality and authenticity through Blockchain technology.
How to Invest in Crypto: Blockchain: The Basic Technology of Cryptocurrency
Cryptocurrencies are all based on the same principle: Blockchain. Crypto is a sequence of numbers stored on a computer in the form of blockchains. The principle is actually quite simple. Take a database. Allow anyone to make changes in this database, provided they declare themselves a member. Set up a very long and complex control procedure that must be carried out each time a certain number (block) of changes is requested. This procedure is carried out not by a single controller, but by all voluntary “members”. Once validated, the “block” of changes is dated and added to the others in the register. Finally, allow everyone to read the registry, and you have a blockchain database! Thus, it is up to the network (all peers) to validate and confirm each transaction.
Also Read: Introducing Blockchain | Creatibuzz
Crypto-Exchanges or Cryptocurrency Exchange Platforms: How to Invest in Crypto?
A cryptocurrency exchange is the meeting point where cryptocurrencies are exchanged in exchange for fiat currency or other cryptocurrencies. In these online exchange houses where the market price is generated, it marks the value of cryptocurrencies based on supply and demand.
A cryptocurrency exchange or crypto exchanges are generally virtual spaces, in which actions of buying and selling cryptocurrency are carried out. Many exchanges also make it possible to trade with shares or any other type of financial guarantee accepted by the community that composes it. The purpose or objective of these is simple: allow the user or trader to participate in a market in which you can get profits from the price changes that occur there. All this is because said assets are exploited using the free-market value associated with each of them.
Thanks to the existence of exchanges, it has been possible to boost the economic and financial life of crypto-currencies. Now, it is possible to easily exchange fiat currency (inconvertible fiat money) for crypto or vice versa, from anywhere in the world. All this with relatively low commissions compared to other traditional methods of exchange.
A Little Bit of History about the Exchanges and How to Invest in Crypto?
Since the appearance of Bitcoin in January 2009, cryptocurrencies have rapidly revolutionized the world. Since October 11, 2009, Martti Malmi has been making the first exchange of bitcoins for fiat. This action led to the creation of the first Bitcoin exchange, the well-known New Liberty Standard. A little more than a year after its appearance, in March 2010, it developed Bitcoin Market which was a proposal presented on the Bitcointalk forum per dollar user.
This paved the way for the birth of other similar projects. For the month of July of the same year, Mt. Gox would quickly become the largest cryptocurrency exchange in the world. However, in mid-2011, it was hacked and 2,000 Bitcoins were stolen. Later, in April 2012, Martti Malmi created eurobtc.com, another Bitcoin exchange that enabled the purchase and sale of BTC.
However, in 2014, Mt. Gox suffered another attack with a more disastrous scope, forever marking the history of cryptocurrency exchanges. At that time, 850,000 BTC was stolen, for a total of 460,000,000 USD causing bankruptcy Mount Gox was completely annihilated.
Despite these problems, cryptocurrency exchanges have multiplied and evolved in terms of quality, security, and services.
How to Invest in Crypto: Top 10 Crypto-Exchanges
- Binance: over 100 different trading pairs between various crypto
- Coinbase: An exchange available in more than 100 countries
- eToro: Easy crypto trading and with social trading
- Cash App: great for beginners
- Bitpanda: Exchange platform to easily invest in 30 cryptocurrencies
- Kraken: A cryptocurrency exchange platform
- AvaTrade: For an advanced crypto trading platform
- Libertex: Buy 50+ cryptos without spread
- Capital.com: To trade cryptos without commissions
- Coinhouse: A space for buying, selling and storing cryptocurrency
How to Invest in Crypto?
In January 2020, a French institute CSA conducted a study on “means of payment” which reveals that 74% of respondents knew cryptos as a means of payment (13% know how it works) and the share of people who would be willing to pay for their purchases with them if they were accepted everywhere is close to 20%.
Furthermore, according to a study carried out in April 2019 by the crypto exchange BitFlyer, two-thirds of the 10,000 Europeans surveyed think that cryptocurrencies will still be there in ten years. However, barely a tenth of those surveyed are betting on the use of cryptos as a currency in the future.
2 ways to buy your virtual currency
There are two ways to get cryptocurrencies:
- Selling a good or service and demanding payment in the cryptocurrency of your choice;
- By converting “classic” currencies (euro, dollar, etc.) into crypto currency.
Kraken, Bitstamp, Poloniex, Coinbase, or Circle for example make it quite easy to convert euros into Bitcoins, or even other virtual currencies.
- Create a cryptocurrency wallet
Whatever your method of obtaining, you will need to create a “wallet” in order to keep your currency.
How to Invest in Crypto: Cryptocurrency Wallets? Say What?
A cryptocurrency wallet is an address in the form of a series of numbers that are accessed through a password. You can create a Bitcoin address and password for free and quite simply on a dedicated platform like BitAddress.org for example. For other cryptocurrencies, other specific platforms exist. Cryptanor thus supports several currencies.
Finally, to pay with a cryptocurrency (or receive a payment in cryptocurrency), an intermediary is required. You will have the choice between:
- an exchange platform similar to a broker;
- Software to download.
Be careful, these intermediaries most often charge commissions. We can also recommend that you choose your intermediary carefully, several of them have already gone bankrupt.
Beware also of scams of all kinds that flourish on the web and “brokers” who refuse to return the sums held on your account.
How to Invest in Crypto: What does the future hold?
Whether you are curious or want to invest, cryptocurrency remains very attractive, but the markets are extremely fluctuating, so it is very difficult to accurately predict the future easily.
However, because of the Covid-19 pandemic, developed economies are making financial stimuli to protect jobs and businesses. Crypto has become a protection for institutional investors against the loss of value of traditional currencies. The future may hold the current scenarios:
- Institutional brokers in crypto currencies will develop.
- Organizations will likely turn to facilitators to access crypto markets and others will choose asset managers.
- The regulatory framework in place may become more stringent.
- As the variety of cryptocurrency services is becoming more and more extensive, we can expect increased regulation for all players in the sector, especially to fight against money laundering or simply protect and regulate money flows.
Lastly, cryptocurrencies are already being used for everyday purchases. They have gone from the virtual world to the real world in just a few years. Beyond the announcement made by PayPal, millions of people around the world are already using Visa payment cards linked to a cryptocurrency wallet on smartphones to pay for their daily purchases. Sweden is going to be the first country to go completely cashless in 2023.
We can therefore predict with all this information that cryptocurrencies will continue to arouse, craze, and attract financial markets and individuals. They will further complement the global financial infrastructure and turn the world cashless in probably a millennium or less. But that is just a speculation as we may never know what can really happen…starting from an apocalypse to the annihilation of the human race itself.