Many financial analysts are predicting that 2022 will see huge growth and wider adoption of cryptocurrencies and it’s underlying technology, Blockchain.
Given the superlative performance of many cryptocurrencies in 2021 and considering the rise in the amount of investor capital flocking into the space especially in the area of innovation, decentralized finance (DeFi), Play-to-earn (P2E) gaming and Non-fungible Tokens (NFTs), everything points to a year in which even more capital (both the much desired “institutional capital” and the small-time or one-man “retail investor”) will flow into the sector paving way for mass adpotion of the technology by big and small players alike.
Here at MoneyMaker.ng, our mission is to help our community make money by introducing you to the latest innovations that will put you ahead of the curve. For this reason, beginning from 2022, we shall be providing greater insights into cryptocurrencies while teaching our Agents, members and followers how to get into it and make money from it.
2022 promises to mark the beginning of very exciting and profitable times for those who are wise and brave enough to get into the crypto space and we will be here to guide you all the way down the right path. You will never walk alone.
Today, we present the first in a series of articles introducing cryptocurrency. The following piece was originally published in German language on https://www.ing.de/wissen/kryptowaehrungen/ and translated to English language and edited/modified/updated by MoneyMaker staff.
What are Cryptocurrencies?
Some warn that virtual currencies are only for gamblers. Others believe it is a new market for investors and a different type of asset class. The term currency is not exactly right, because behind a currency there is always a state or a central bank,” says a financial expert. This is not the case with Bitcoin and most other cryptocurrencies.
Independent and not Manipulable
Bitcoin, the first and best-known cryptocurrency, has been in circulation since 2009 to enable cashless payments on the Internet. The technology behind Bitcoin is called blockchain and is often referred to as a digital account statement.
The idea behind the introduction of cryptocurrencies is: make yourself more independent from banks, governments and regulations. There is no longer a place that says: This is the bank statement, you have that much credit. Instead, all parties have to agree on what the bank statement looks like. Since the blockchain database is managed by several computers, it is considered to be non-manipulable and transparent.
The Demand Determines the Price
In the meantime, cryptos have also become a popular form of investment – with high returns and high risk. Because as fast as the prices of the crypto currencies go up, they can also go down again. We have seen that for the past five years.
There are now more tens of thousands of such cryptocurrency coins (or tokens) with hundreds more being launched every day – they all work on the same principle, according to one expert: “There is almost always a limited number except in a few emergent cases.” The demand therefore determines the price. This limited availability has made Bitcoin and its imitators coveted objects for speculation in recent years.
There was a hype about Bitcoin in 2016 and 2017. While one Bitcoin cost 400 euros at the beginning of 2016, the price soared to over 19,000 US dollars by the end of 2017. Since then, the price development has resembled a roller coaster: from the end of 2017 the price fell again with violent fluctuations to $ 3,400 and continued its price movements with further violent fluctuations between 12,000 and 4,500 US dollars, only to surge up again. In 2020, the corona crisis briefly stopped its highs in spring, but from summer onwards things picked up again rapidly.
At the end of November 2020, Bitcoin stood at $ 19,133.40. A month later, Bitcoin shot up in value such that by January 6 2021, it traded above $39,000 per bitcoin. 2021 saw even more high and low swings but with a general rising trend. After reaching an all time high of above $68,000 in November 2021, the price dropped to around $50,000 by Christmas of the same year.
What other Cryptocurrencies are Currently Popular?
Bitcoin has long since become a fixed asset class. There are now a large number of alternatives, but according to financial experts only a handful will survive.
Ethereum (ETH) is a global platform. After Bitcoin, it is the cryptocurrency with the second largest total value. Like Bitcoin, Ethereum is a blockchain-based technology. The Ethereum Blockchain not only offers the possibility of receiving and sending payments, but also all kinds of decentralized applications can be processed via the Ethereum Blockchain network. The name of the Ethereum currency is Ether or ETH.
Ripple (XRP) is a payment network for banks with the aim of making international payment transactions between them more efficient and cost-effective. It is a system that is primarily dedicated to payment transactions between different currency areas and tries to make inefficient payment corridors efficient. That is why Ripple is often referred to as the “Bitcoin of the banks”.
Tether (USDT) is an unregulated cryptocurrency with tokens. It is issued by Tether Limited. Tethers are anchored to the rate of the US dollar or “tethered” – in German that means something like “tied up”. Due to their stability, tethers are used to hedge against crypto market fluctuations.
Solana (SOL): Compared to the previous three, Solana is a relatively new kid on the block who saw a meteoric rise in the value of ts token in 2021. This faster and more scalable blockchain has become the new darling of many big time investment funds and retail traders alike.
There are hundreds (if not thousands) more good, semi-good and promising cryptocurrencies not included in the short list above. If you want to find out more about the top cryptos, you will find a longer list here => https://coingecko.com
Means of Payment for everyday Life?
Worldwide and nationwide, not only in large cities, some shops now offer their customers the opportunity to pay with crypto currencies. However, digital money is only partially suitable as a means of payment for everyday life due to the strong fluctuations in value. So if you want to trade or pay with Bitcoins, it should be clear that cryptos owe their existence to the blockchain and most are not linked to real values, a fact which is slowly changing with the rise of play-to-earn gaming and other innovative and solid use cases currently being developed.
By the way : Bitcoin is becoming more and more popular with companies like PayPal. Most recently, PayPal had acquired 70 percent of all the Bitcoin that was mined in a month (amounting to millions of dollars) – because the demand for its crypto service increased.
How does the Handling of Cryptocurrencies Work?
You can’t get bitcoins from your local bank. Interested parties must buy through a crypto trading platform, currency exchange, directly or via a peer to peer trading network. In order to hold or trade with the crypto money, you have to install software: This can either be a free Bitcoin client or a leaner “wallet”. Even entrepreneurs who accept Bitcoins must set up such a wallet beforehand.
What is a Crypto Wallet?
A crypto wallet is like a digital purse which you can use to store, send and receive crypto. Some wallets also allow you to buy crypto directly or open savings like accounts where you can deposit your crypto to earn interest but not all apps provide such features.
Each blockchain usually has its own wallet but some are compatible with each other so you can use the same wallet for these various compatible blockchains.
The most popular wallet for android mobile is the Ethereum-compatible Trust wallet while the most popular for computers is the ethereum compatible Metamask. Even if you have other wallets, try to also have these ones because they can be used for many popular blockchains like Binance Smart Chain, Polygon, Fantom etc. They are also free to download.