‘Investing’ for those who aren’t familiar with the terminology is the act of placing money into any venture that is likely to give profitable returns in the future. The first recorded collectively made investment schemes were started in the 18th-century Dutch republic.
Investing can be a very profitable venture when done right.
The process of investing needs a lot of patience and skill gained over long periods. This is mainly due to the highly unpredictable nature of the stock market. What is a stock market?
It is a platform for the entire sum of businesses and companies willing to offer a portion of the ownership in their company for a specific price. Owners of a company issue shares to raise money or dilute controlling interests.
Getting back to the stock market’s unpredictability is because the platform is susceptible to even minor factors. For example, let us say a motorbike manufacturing company CEO voices his opinion against vaccination of the masses in light of the recent ongoing pandemic.
Among the pro vaccinating population, who are also investors of the company, might find the comment made by the CEO highly distasteful. If you’re trying to understand BitCoin a lot better, Bitcoin Revolution is the perfect place to look.
More often than not, a similar situation sets off a chain reaction of events that begin with the mass selling of the company’s shares, leading to a price drop in the value of the company’s shares.
Depending on the magnitude of the decline, the stock market can take a considerable hit which isn’t suitable for anyone. This is where cryptocurrencies entered the market, forever changing the landscape of investing.
What are Cryptocurrencies?
Cryptocurrencies are a form of electronic currencies that exists digitally. They have a virtual form only, which means they have no physical construct and only exist in the digital world. The first cryptocurrency originated in an outlined paper of the year 2008. All credits go to an unknown person or group of unknown cryptographers under the pseudo-anonymous name Satoshi Nakamoto.
Cryptocurrencies were invented to overcome obstacles faced while using physical currencies. What makes this form of money so secure is its design using ‘Cryptography,’ a study of techniques intended for highly secure communication. This means anything in an electrical form of communication sent is only accessible by the two parties between who it is intended.
Hence, cryptocurrencies are untraceable and 100% secure. Various kinds of cryptocurrencies presently exist: Bitcoin, Ethereum, LiteCoin, EOS.IO, Stellar, NEO.
Primary statistics differentiating the top 3 Cryptos are –
This currency was launched in 2009, which has a present circulating supply of more than 17 million, a maximum supply capped off at 21 million. It has a release rate of 12.5 per block. It has a maximum transaction rate of 7 per second.
Ethereum was launched in 2015 with a circulating supply of more than 102 million with no upper limit to the maximum amount of supply. It has a release rate of 3 per block. You can have up to a maximum of 20 transactions per second.
This currency was launched in 2011 with a circulating supply of more than 58 million and has a maximum supply limit of 84 million. It has the highest release rate of cryptocurrencies of 25 per block. LiteCoin has a maximum transaction limit of 56 per second.
Launched as an open-source software cryptocurrency in 2009, it is a decentralized currency without a head body involved in its issue. BitCoin transactions are facilitated and verified by network communication endpoints recorded in a ledger called a blockchain. This ledger is publicly distributed, making this cryptocurrency highly transparent to the eyes of the public.
The need for BitCoin has various causes, but two of the essential grounds for it to come into existence are counterfeiting of physical currency and price manipulation. Making use of cryptography, this digital currency is highly secure and virtually untraceable. You can invest real money into buying BitCoins or can create BitCoins using a process called mining.
Mining, although, is a prolonged process for obtaining BitCoins when done on home CPUs.
It’s better off done with the help of a power company as it takes enormous amounts of electricity to mine one BitCoin. This not only eats up a lot of fuel to power your mining activities but also leaves a considerable carbon footprint, which is one of the biggest criticisms about BitCoins.
Factors Influencing The Price of BitCoin
BitCoin is a highly volatile currency. This means that the price of BitCoin is unstable and constantly changes. There can be various factors causing this volatility. Some of the most prominent reasons for the continuous change in the price of this widely used Crypto are as follows :
- Demand and supply for BitCoin
Like products and physical currencies, an increase in the demand for BitCoin will increase its price, and an increase in its supply over the existing demand will cause BitCoin to fall.
- Mining of BitCoins
Mining is the process of creating bitcoins at a set rate. This process is closely intertwined with the supply effect on price. BitCoin, as stated earlier, has a limit of introducing 21 million new BitCoins. Once this limit is reached, mining activities will cease. Until that point, an increase in mining activities means new BitCoins are entering the Cryptocurrency market. An increase in the number of BitCoins means a more excellent supply, reducing BitCoins’ price.
- Competitive currencies
BitCoin isn’t the only currency to exist on the current market. More recent cryptocurrencies such as Ethereum and EOS are slowly but steadily gaining momentum. For every trader that invests in a different cryptocurrency, the demand for BitCoin falls, reducing the currency’s price.
Bitcoin is one of the most widely used currencies that exist on the market. It is the most valued currency among other cryptocurrencies. BitCoins are a 100% safe and secure cryptocurrency to invest in. They currently have limited trading prospects but will change in the future. You can even invest as low as $100 into BitCoin and create your investment portfolio.