Cryptocurrency is a payment method that can be used during online transactions. Typically, it works when companies provide unique currencies to potential customers who want to buy services or goods from that company. A key component of cryptocurrencies is that you must exchange them for a real currency to complete the transaction.
Cryptocurrencies use a particular technology called a blockchain. In simple terms, the blockchain system is a type of technology that manages and controls from several computers. None of these computers can act as the central control. The decentralized capability of cryptocurrency technologies increases their appeal and security.
Most popular types of cryptocurrencies
Some of the major cryptocurrencies include:
Bitcoin has dominated the world of cryptocurrencies since it was first released in 2009. Although its creator remains unknown, the currency has experienced phenomenal growth and now has a greater market capitalization than gold.
Ethereum first entered common usage in 2015, and it is currently the second most widely used cryptocurrency in the world. Unlike Bitcoin, Ethereum growth has not been smooth. Several obstacles, such as cyberattacks, have affected the currency’s stability. Nevertheless, its value continues to grow every year.
Litecoin mimics the structure of Bitcoin. However, it deviates from Bitcoin’s emphasis on stability by welcoming new innovations to improve payments and the speed of transactions.
Dogecoin is another one that started as a joke in 2013. It is a satirical homage to bitcoin. Named after a Shiba Inu dog that was the subject of an internet meme at the time, cryptocurrency enthusiasts and online jokesters began trading dogecoins for fractions of a penny. The cryptocurrency dogecoin went on the craze after Elon Musk poked fun at it on Saturday Night Live before announcing that his company would accept it as legitimate payment for a mission to the moon.
Why are cryptocurrencies so popular?
Cryptocurrency trading has experienced phenomenal growth within the past few years. According to Technavio, the cryptocurrency market grew by 7% in 2020. More individuals and companies have started to use cryptocurrencies when they are conducting online transactions. As a result, several cryptocurrency innovations and technologies are entering the mainstream digital environment. Innovative technologies such as cryptocurrency debit cards have been seen during some financial transactions.
One of the major reasons why cryptocurrencies are becoming popular is that they are decentralized. While other currencies are usually controlled from one central location, many cryptocurrencies use the decentralized blockchain system.
Another reason behind the increased popularity is better security levels. Occasional cybersecurity attacks have targeted traditional payment methods. A cryptocurrency is a secure form of online payment because it uses advanced cryptographic techniques. That is why the popularity of cryptocurrencies is expected to increase throughout this decade.
Should you invest in cryptocurrency?
After hearing about cryptocurrency, you may decide to invest in one of them. There is no doubt that one of the questions you will be facing is whether it is a smart investment. Unfortunately, there is no actual answer to this question. A cryptocurrency can be a goldmine for some people, but it can bankrupt other investors. This means that you will have to wade through a lot of financial risks before you can make any significant profits. Regardless of this hitch, cryptocurrency still remains a very lucrative investment.
Cryptocurrency investors will tell you that Ethereum and Bitcoin investments are high-risk investments. The value of a cryptocurrency can fluctuate wildly within a very short period. At the same time, online scammers have started introducing fake cryptocurrencies into the market. If you’re not careful, you may end up investing in a cryptocurrency that doesn’t have any market value. Consequently, it would help if you purchased your cryptocurrencies from a trusted trading platform.
With major retailers such as Starbucks now accepting cryptocurrency payments, it is obvious that investing in cryptocurrencies can be a stable investment. Nevertheless, you must learn about each cryptocurrency, get advice from industry experts, and start with small investments. More importantly, you will need a strong cybersecurity partner to protect your cryptocurrency assets and transactions. KME Systems is a cybersecurity agency that protects online transactions and assets. If you are planning on securing your online transactions, please don’t hesitate to contact us.