Doubling your money in short time is the most powerful temptation, only few could resist. A series of shocks of cryptocurrencies meltdown shook the foundations of digital assets in 2022, but it is still a popular investment.
By Atif Khan
Islamabad: Doubling your money in short time is the most powerful temptation, only few could resist. It was the greed of becoming rich overnight that hundreds and thousands invested in the most volatile money of the world, cryptocurrency. A series of shocks of cryptocurrencies meltdown shook the foundations of digital assets in 2022.
The collapse of a so-called stablecoin in May and the epic unravelling of the FTX crypto exchange in November, resulted in a wave of bankruptcies around the world, but still, many invest in the digital currency to try their luck. Below are the basics about crypto currencies you should know before making any investment decisions.
What is cryptocurrency?
A cryptocurrency, digital currency, or crypto is a payment system that uses cryptography to secure its transactions and to control the creation of new units. It operates without a central authority and is not subject to government regulation. Currently, there are various types of cryptocurrencies available, most of which were created as a result of Bitcoin.
History
In 1983, American cryptographer David Chaum conceived of a method of electronic payments which he called 'ecash.' Later, in 1995, he implemented it through Digicash, an early form of cryptographic payments. Digicash required software in order to withdraw notes from a bank and designate specific encrypted keys before they could be sent to a recipient. This allowed the currency to be anonymous by third-party observers. Cryptocurrencies gradually began to take hold throughout the years – becoming more popular with each passing day.
Leading Cryptocurrencies
Following are the top three trending cryptocurrencies of the world
1: Bitcoin:
Bitcoin is a decentralized digital currency that can be transferred between users through the peer-to-peer bitcoin network. Bitcoin transactions are verified by network nodes and recorded in a public distributed ledger called a blockchain. The cryptocurrency was invented in 2008 by an unknown person or group of people, using the name Satoshi Nakamoto. The currency began use in 2009, when its implementation was released as open-source software.
2: Ethereum
Ethereum is a decentralized, open source blockchain platform that features smart contract functionality. It ranks second in market capitalization among all cryptocurrencies, and ether is second only to bitcoin in terms of transactions. Ethereum was conceived by programmer Vitalik Buterin in 2013. Additional co-founders of Ethereum include Gavin Wood, Charles Hoskinson, Anthony Di Iorio, and Joseph Lubin.
3: Tether
Tether is a cryptocurrency stablecoin that was launched in 2014 by the company Tether Limited Inc. iFinex, which owns the Bitfinex exchange, and holds a majority stake in Tether Limited. As of July 2022, Tethrel has minted USDT on ten different protocols and blockchains. USDT is described as a stablecoin because it originally had value of $1 per unit.
Market value of Bitcoin
Bitcoin is currently priced at $6,643.26, a fall of close to 66% since it hit a high of near $19,780 in December last year. Its current market capitalisation stands at $112.7 billion.
How to Invest in Crypto
In order to trade in cryptocurrencies, one must open a crypto trading account on a cryptocurrency exchange. A cryptocurrency exchange, helps in the trading of cryptocurrencies in various currencies and also provides wallet services. It acts as a broker and facilitates transactions between the buyers and sellers, and charge money for transactions. After opening an account one may deposit money in the cryptocurrency exchange via card transactions or direct bank transfers to purchase cryptocurrencies, against a fee.
Crypto In Pakistan
Early this year, around 37,000 people, mostly from Punjab province, invested money in the digital coins on a promise to get rich over night. They were lured in through mobile apps offering high returns on investment in the virtual currency. The spammers claimed the applications were linked to Binance, the leading virtual platform for buying and selling Bitcoin and other similar cryptocurrencies. Soon, the mobile apps suddenly vanished, and investments of around Rs 17.7 billion made by Pakistanis were lost. It was a novel method of committing fraud, according to the Federal Investigation Agency. The individuals who launched the applications had connections with the crypto exchange. After the scandal, the government banned cryptocurrency in Pakistan. Crypto is already banned in many countries, including Algeria, Bangladesh, China, Egypt, Iraq, Morocco, Nepal, Qatar, and Tunisia, due to its volatile nature and the regulatory challenges.
Crypto limitations
While crypto trading is the current rage and may even yield potentially high returns, it is an incredibly speculative and volatile buy. The market is still in its infancy. Investing in something that’s new has its own challenges.
You must be prepared for some extreme ups and downs, including some dramatic swings. If you don't have enough disposable income, or if your investment portfolio or risk appetite can’t handle that, cryptocurrency might not be a wise choice for you. In addition to its high-risk nature, understanding cryptocurrency takes time and effort. For newbies Crypto may be vulnerable to security risks. If you plan to minimise risks by investing for an open ended or long period of time, please remember that despite all the rosy forecasts cryptocurrencies haven't proven themselves as a long-term investment.
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