Internet democracy has also reached the economic system. In 2008, Bitcoin emerged in the hands of an individual or group of individuals under the name of Satoshi Nakamoto. The intention? Create a digital currency, decentralized and pseudonymous that offers total control to its holders. It was the birth of cryptocurrencies, which are still in fashion more than a decade later.
Despite the fact that there are more and more cryptocurrencies, Bitcoin is still king. Its deflationary nature allows it to accumulate value over time. But in the shadow of this giant, many other interesting projects have emerged. However, it is a highly speculative and volatile world, so you have to know where to choose and what you are doing.
Note
- Cryptocurrencies are nothing more than a digital monetary system. These tools are a form of payment that allows, through the Internet, to acquire products or access services.
- In general, its main function is to provide a fast and direct payment, without intermediaries and that allows the holder of the same to acquire products and services with total freedom.
- Although the bitcoins created under the alias of Satoshi Nakamoto in 2008 were pioneers, today there is more than one type of cryptocurrency, among which are other very famous ones, such as Ethereum and XRP. Each one has a different value and uses, as well as a dissimilar fluctuation that depends on the cryptocurrency “stock market”.
The best cryptocurrencies on the market: our recommendations
Since its appearance in 2008, new options have emerged with the same purpose, but, yes, with different values. Although the bitcoin digital currency is the best known among users, it is not the only one. Currently, we can find in the digital market a wide variety of cryptocurrencies with a common base, but with different nuances, and that may be of interest to you.
- Bitcoin
- Ethereum
- XPR
- Litecoin
Bitcoin
It was the pioneer in starting with this new payment method. It is the virtual currency with the highest security according to the market and with the highest network traffic. This cryptocurrency continues to be the preferred one among users, as well as the most used and accepted in terms of services and products.
One of the characteristics of this cryptocurrency is that it is deflationary: only 21 million bitcoins will be issued. In addition, its blockchain technology guarantees the impossibility of counterfeiting and reproducing them.
Ethereum
We are facing one of the great alternatives to the queen of cryptocurrencies. In this case, it has a really fast transaction method, making it one of the most efficient on the market.
In addition, it offers the smart contract function, a tool that facilitates the creation of contracts and executes them automatically. It is backed by hundreds of thousands of programmers who constantly reformulate it with the aim of improving it.
XPR
This is another of the most demanded electronic currencies. Its similarities with respect to the pioneer Bitcoin are notorious. XPR offers us a much lower value and therefore more affordable.
It consists of a more updated and efficient version that is already positioning itself among the best in the market.
Litecoin
With a capacity to process transactions superior to Bitcoin, this cryptocurrency boasts of being an improved and much more efficient version of the pioneer cryptocurrency. In addition, the commissions are presumed to be also lower.
Therefore, more and more brokers like the xlntrade and similar businesses around the world accept Litecoin. Although it is far from the market capitalization of Bitcoin, it is undoubtedly an essential complementary cryptocurrency with a great future ahead.
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What you should know about cryptocurrencies
Acquiring these new digital currencies will not require much effort, since you can buy them from any device that allows you to access the Internet, be it your mobile, tablet or computer. Of course, always try to do it from recommended websites, easily accessible and with which you know that you can make an efficient and safe
What are cryptocurrencies?
The economic system has suffered different crises throughout history, generating distrust in part of the population. These recessions have opened a new path in which the digital world has been able to enter. With this, the traditional currency has begun to lose strength in the face of decentralized and digital alternatives that are advertised as a refuge from inflation.
These non-physical currencies are known as cryptocurrencies, of which, as we have already said, there are several variants. These are intangible options created in order to generate a faster and more secure online payment method . However, this new system has not yet become established in the bulk of society and we could say that it is still emerging.
When was cryptocurrency born?
The first vestiges of cryptocurrency date back to the late 1980s with the cypherpunk movement , which advocated crypto for political-social change. However, it was not until 2008 when, as a result of the financial crisis, and under the pseudonym Satoshi Nakamoto, his concept emerged in a forum article: “Bitcoin: a peer-to-peer electronic money system” .
Why is it recommended to use cryptocurrencies?
The appearance of cryptocurrencies is due to the desire for a completely decentralized financial system in which each individual is the absolute owner of their money. It is about looking for a method of economic exchange that does not depend on third parties, that is non confiscatable and that also fights against current economic policies, which lead many currencies to a high depreciation ( 2 ) .
Ever since the first bitcoin purchase was made by a twelve-year-old named Erik Finnam, the equivalent of each bitcoin has been on the rise . In 2011, when Erik decided to invest in this digital currency, 1 bitcoin cost around 50 dollars.
Many have defined Bitcoin, the leading cryptocurrency by market capitalization, as “digital gold” . That is, as a refuge value in times of crisis and as an asset that is revalued in the medium-long term. Its high volatility and its potential upward trend in the medium-long term can lead to it and displace it as a means of payment in favor of other alternatives such as Litecoin or XPR
What advantages and disadvantages do cryptocurrencies bring?
Although this innovative proposal seems to be a great alternative to the traditional monetary system, it also has its drawbacks. The world economy continues to adapt to changes and not all of them arrive as quickly as the new offers that continue to appear in our society. Let’s take a closer look at all of this:
Advantage
- Greater speed and effectiveness: This type of digital currency provides greater speed and effectiveness as a payment method. It does not require intermediaries such as central banks, which slow down the movement of transactions.
- Blockchain: They use a blockchain , a security system that, as it is not centralized, hinders the possibility of fraud and, therefore, increases consumer privacy and security.
- Price: The cost is another of the benefits that digital money brings us. For example, in transfers this is cents or, on some occasions, even free.
- Self-regulation: With the use of a digital currency, you are your own manager and the only administrator of your money. In this way, you avoid account opening costs, as well as maintenance or permanence. Also in relation to the fulfillment of any contract to which you adhere when you decide to store your finances safely through traditional methods.
- Pseudo-anonymity: Although all transactions made with cryptocurrencies are recorded in their respective blockchains (digital public ledger), it is practically impossible to associate cryptocurrency wallet addresses to a specific user. Much more if this user has several portfolios.
Disadvantages
- Instability: Its value fluctuates and the consumer can never be sure if it will last for a long time or not, since it can change quickly in price depending on demand. It is worth remembering that user who paid 10,000 bitcoins for a pizza, which at today’s exchange rate would be more than 80 million euros .
- Payment difficulty: Not all businesses are adapted to the new forms of payment that are emerging, so it is very likely that you will not always find the specific services or products that you want to purchase with this new online payment method .
- Lack of knowledge: Although cryptocurrencies may replace traditional money in the future, technology advances faster than society and at the moment the number of applicants is not as high as it could be in a few years.
- Irreversible purchases: Another problem that the use of cryptocurrencies can bring us is that, once used, it is impossible to go back on our actions. Purchases are irreversible and just as is obtainable with forex trading, therefore, a mistake can make you lose your finances. Find out more about forex trading, if you don’t know what it’s all about
Where to buy cryptocurrencies?
There are many ways to earn cryptocurrencies. One of the most common is mining. Without going into technical explanations, a cryptocurrency miner works by solving complex mathematical problems that allow him to complete blocks of transactions. When one of these miners believes they can authorize a transaction block, it is put to a vote by the community.
If approved, the miner who has completed the block receives a reward. In the case of bitcoin , it is halved every four years. This event is known as a ” halving ” ( 4 ) and further enhances the deflationary nature of the currency. In the beginning, it could be mined without any problem with any home PC. Currently, vast equipment and great economic potential are needed.
Other methods to buy cryptocurrencies
Next, we collect places where you can buy cryptocurrencies. We quote some names as an example. However, you should not understand it as an invitation to buy from them. It is simply a matter of exposing the various alternatives. It is up to you to research or compare features to be able to buy cryptocurrencies in the way that suits you best:
- ATMs : There are Bitcoin ATMs scattered all over the world. Some only allow purchase. Others, by contrast, also allow you to sell. Every time, they work with more different cryptocurrencies. They have their limits and the commissions are usually high. Of course, it is one of the most discreet methods.
- P2p platforms: Some platforms such as Localbitcoins or Localcryptos allow the purchase and sale of Bitcoin and other cryptocurrencies without intermediaries. This allows you to save on commissions and even get “bargains” below the market price. The problem? That you have to be careful, because you can be a victim of fraud.
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Exchanges :
- This type of platform allows you to operate with cryptocurrencies at all levels. In other words, they are an open door to real investment. There are examples of all kinds, such as Kraken or Coinbase. However, if you are not going to be trading frequently, it is recommended that you store your cryptocurrencies outside of the exchange . Remember what happened to Mt.Gox, which went bankrupt after a system failure that allowed the theft of more than 850,000 BTC ( 5 ) .
- Physical world : You do not have to buy or sell BTC or any other cryptocurrency online. Just like you can use cryptocurrencies to make everyday payments, you can also buy them from someone. It is a fairly safe method if it is face to face. The problem is that, because they are not yet fully extended, it has its physical limitations.
Where to keep cryptocurrencies?: Bitcoin and other cryptocurrency wallets
As we have already pointed out before, if you buy your cryptocurrencies in an exchange and you are not going to trade them , take them out of the platform as soon as possible. But how? Well, to a cryptocurrency portfolio. There are many alternatives in this regard. A cryptocurrency wallet offers a public address that will appear on the blockchain .
The security lies in the private key. This is needed to be able to send cryptocurrencies from one place to another. If you are the one who stores said private key and not the exchange , you will be more secure. Exchange platforms have certain vulnerabilities, which can expose private keys. However, not all Bitcoin and other cryptocurrency wallets are equally secure.
Types of cryptocurrency wallets
We have already talked about integrated wallets on exchange platforms. The problem lies not only in the vulnerability, but also in the fact that the private addresses are also known to the exchange managers . In this way, the very nature of cryptocurrencies is lost: decentralized and manageable without the need for third parties. For this, different wallets are offered:
- Desktop wallet : They are downloaded to a device. They are easy to use and also offer high levels of security, since they can only be accessed from that device. However, if someone remotely “hacks” the device where you keep the wallet, goodbye!
- Paper wallet : Extremely secure, since you have your private and public keys on paper. You create them and write them down. They are more cumbersome to use and present the risk that if you lose the site you have written down the keys for, you will not be able to access your capital!
- Hardware wallet : These are wallets, like paper ones, offline . This feature makes them known as cold wallets. In the case of hardware wallets , these are USB-like or card-mimicking devices. These include all the necessary keys to operate. They are virtually “unhackable”.
What can be done with cryptocurrencies?
Cryptocurrencies have, from a digital point of view, the same functions as fiat currencies . In this way, you can make savings, sell them or buy with them.
- Save: Many of the cryptocurrency consumers invest in them with the idea of saving in the medium-long term. Keep in mind that its value (Bitcoin) has increased by 14,000% since its inception. Thus, digital currency investors expect this to continue.
- Sell: If you think you have enough crypto in your wallet, you can sell it. However, another option is to convert them into physical money through an exchange , a Bitcoin ATM or sale to an individual. You can receive the money in cash, by bank transfer or through an electronic wallet such as PayPal or Skrill. Remember that if the sale exceeds what was spent at the time you bought, you must declare the profits to the Treasury.
- Buy: Although there are still few, more and more places allow you to pay with Bitcoin or other cryptocurrencies. It is true that in the physical world there is still a long way to go, but it must be taken into account that cryptocurrencies are barely a decade old. In the case of Bitcoin, tools such as Bitcoin Map are offered , which allow you to find establishments that accept them. In the digital world, the offer is much greater.
What are the services and products that I can acquire?
As for some of the services and products that we can acquire with cryptocurrencies, we can find web pages where we can organize our trips. Also, online sites to buy tickets for events or access online services, such as bookmakers:
- Travel: We can make use of our cryptocurrencies on pages such as Expedia or Destinia, where they offer several types of them to be able to make your reservations.
- Video games: If you are a true gamer , you should know that these virtual currencies, such as TriForce Tokens, are highly demanded in this field. Although because of this, prices are getting higher.
- General electronic commerce: Large international companies with a large number of annual sales, such as Amazon or Aliexpress, already have a cryptocurrency payment option. Of course, on Amazon it is through the purchase of vouchers or gift cards with cryptocurrencies.
- Events and bets: Even some American basketball teams have opted for this payment method, first the Sacramento Kings and now, since this year, the Dallas Mavericks. Also some bookmakers, such as ClouBet, Betcoin, Pinccale or 1xbet, have already joined this new online payment method .
Now that you have a basic idea of how cryptocurrencies work and what they are for, you need to know which cryptocurrency best suits your needs. Everything will depend on what you are looking for and your ultimate intention of use:
Value and capitalization
To make an investment in cryptocurrencies, it is necessary to be informed of everything that surrounds them. That is, its value, its use and conditions are some of the measures to take into account before taking the step of investing in a crypto exchange.
Currently, the main page that monitors live coin value is CoinMarketcap. From it, you can make an assessment of how cryptocurrencies are behaving in the digital market.
Platform
We have already addressed the different alternatives that are offered when buying cryptocurrencies. However, we have not delved into some important details. For example, most exchanges require the user to log in before they can invest in cryptocurrencies. The verification processes can be intricate and also go against the principles of cryptography: pseudo-anonymity.
If you don’t trust p2p platforms, don’t have anyone nearby who wants to sell, have access to Bitcoin ATMs and no ability to mine, there is a solution. There are some web pages like myCoinify or Changelly that allow you to buy and sell quickly and just by entering a few data. The problem? We detail it below: commissions.
Commissions
If you are going to use platforms that are not p2p, you should pay attention to the commissions. This aspect is essential if you are really looking to make money with cryptocurrencies or at least not lose it. Obviously, you should also check that the website where you are going to buy the cryptocurrencies is capable of sending said purchase to your personal wallet. Remember that if you are not going to trade, it is the best.
Regarding commissions:
- These usually range between 1.5 and 3%. In some places, or by using premium accounts, you can get very low commissions ranging from 0.2 to 0.5%. Obviously, the commission also depends on the value of the transaction. The more money you move, the cheaper it will be.
- In addition to this direct commission, you must take into account the spread. More or less, we could summarize it in the exchange rate applied by the platform. For example, if the actual value of Bitcoin at any given time is, say, $9,200, but the trader you want to trade it on rates it at $9,500. Worth?
Use
You must ask yourself what you want cryptocurrencies for. Those looking for complete control of their finances, as well as the ability to pay virtually anonymously, will find many uses for it. But, if not, why are you going to buy a cryptocurrency? Although there are cards like Bitnovo that allow purchases with automatic change to fiduciary currency, volatility does not help.
One of the most common uses among ordinary mortals is speculation. However, for this, you have to be well trained in economics and want to learn constantly. Another approach taken by those who do not understand much to operate in the short term is the so-called HODL. It is about accumulating BTC or other cryptocurrencies to, in the long term, have a real fortune.
Summary
In general, cryptocurrencies are a new digital monetary system. It was driven by the need to open a new online shopping market; which has led to business options for some investors. Since its inception at the end of 2008, cryptocurrencies have multiplied at a rapid rate. Today, there are more than 1,500 alternatives and their value does not stop growing.
Some consider them the money of the future, but it must be taken into account that, for this to happen, society must be open to change. On the other hand, the diversity of laws and protocols in each country hinders the way in which these new currencies can be accepted by all and thus, in some way, globalize.
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