Bitcoin is the leading cryptocurrency with a market value of $880billion, followed by Ethereum with $415billion, Tether with $79 billion, Binance Coin with $68 billion, and U.S. Dollar Coin (USDC) with $53 billion.
What is Cryptocurrency?
A cryptocurrency is a digital form of money, a new concept from its traditional physical form to digital binaries stored in our computer hard drives.
Cryptocurrency is a digital asset enforced by a decentralized network: a block chain system that verifies and records transactions secured by cryptography.
Why is Cryptocurrency Important?
In the modern world, basic needs are produced, distributed, and consumed through economics based on the concept of money. Thus these supply chain transactions (buying and selling) are done using currency.
A large number of retailers accept bitcoins as a medium of exchange both online and offline. In 2021 there were reportedly 6000 Bitcoin ATMs present around the world, Kenya among these countries.
According to Chainalysis not only has Africa’s cryptocurrency market grown over 1200% by value received in the last year, but the region also has some of the highest grassroots adoption in the world, with Kenya, Nigeria, South Africa, and Tanzania.
1. How to Invest in Cryptocurrency?
Before investing in an asset, we first need to understand how it works. These include enabling technology and how the assets value appreciates and depreciates (pros and cons).
To understand cryptocurrencies, we need to understand the enabling technologies (blockchain and cryptography) and market trends from 2009 up to date.
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2. What is Blockchain?
A blockchain is a digital ledger that records transactions in spreadsheets/ blocks stored across networks. It is designed to track valuable transactions, including medical, currency, and various supply chain transactions.
Multiple participants access the distributed digital ledger via a decentralized peer-to-peer network secured by cryptography.
3. What is Cryptography?
Cryptography is the study of secure communications techniques that allow only the sender and intended recipient of a message to view its contents. The term is derived from the Greek word kryptos, which means hidden.
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4. What is USD Coin?
The USD Coin (USDC) is a stable coin pegged on the US Dollar, launched in September 2018.
The USDC has a stable price of 1 USDC equal to $1 powered by Ethereum, a decentralized, open-source blockchain with smart contract functionality.
In March 2021, Visa announced that it allowed USD coins to transact on its network, becoming the First Major Payments Network to Settle Transactions in USD Coin.
5. History of Cryptocurrencies
Bitcoin was the first cryptocurrency, and the price of Bitcoin as of April 2022 was at $46,300 from $1 in February 2011, when the coin’s value matched that of the dollar.
The first mention of bitcoin occurred in 2008 where a paper titled “Bitcoin: A Peer-to-Peer Electronic Cash System” was shared over the internet by an anonymous publisher under the pseudo Satoshi Nakamoto.
6. How to get Started?
To get started, you need a cryptocurrency exchange platform where you can purchase and trade digital assets and currencies.
What is a Cryptocurrency Exchange?
A cryptocurrency exchange is a platform that allows individuals/ companies to trade digital assets for other assets.
Users of a cryptocurrency exchange can perform buying and selling transactions for assets and currencies such as conventional fiat money or other digital currencies.
Peer-to-Peer crypto exchanges allow you to buy or sell directly with another individual without identifying your identity.
Top cryptocurrency exchanges in 2022 include:
- Coinbase
- Cash App
- BitMart
- Crypto.com
- Binance
Qualities of a Good Cryptocurrency exchange include:
- Easy to get started- a platform with good UX/ UI design accompanied by support and an online knowledgebase/ documentation of system processes allows new users to start trading.
- Wide selection of digital assets and currencies to trade- a platform with a wide variety is more suitable for buyers and sellers.
- Low commissions and transaction fees- a platform with low commissions and fees allows users to trade more frequently at a low cost of trading.
Closing
The USD coin is a good option for persons who want to venture into the cryptocurrency world without taking high risks, while bitcoin is a good option for experienced traders who understand the risks.
Once you comprehend the pros and cons of cryptocurrencies, you can now decide whether to invest or not.
Be aware of scammers posing as crypto exchanges offering to trade, keep updating your cryptocurrency knowledge base, and perform due diligence before trading to avoid losing your financial assets.
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