Cryptocurrency is an electronic currency with no physical equivalent. Thousands exist today, but most will eventually disappear. What is a cryptocurrency? What are its characteristics? How can I get hold of one? Find out in this guide our answers to the most frequently asked questions about cryptocurrency.
What is a cryptocurrency?
Also known as digital currency or cryptoassets, cryptocurrencies are decentralized electronic currencies. This means that it is exchanged peer-to-peer (P2P) without trusted intermediaries such as banks. Nor is it legal tender. Unlike coins and banknotes, cryptocurrencies have no physical backing.
As a result, they are not regulated by a central body. Nor are they indexed to, say, gold or the dollar. In fact, these new virtual currencies use cryptographic algorithms and blockchain technology.
The latter enables money to be transferred from one owner to another securely and without intermediaries. Cryptocurrencies can be stored in an electronic wallet protected by a secret code that is known only to the asset owner. You can use them to buy almost anything: cars (Tesla at one point allowed its cars to be purchased in BTC), real estate, insurance or even NFTs.
According to the French government, cryptocurrencies cannot be considered currencies, as they are too volatile. Indeed, they are in no way monetary units like the euro, dollar or pound sterling. They originated on the Internet and depend on it.
Cryptocurrencies are created by well-known or anonymous developers. They define the characteristics of their digital assets: number of coins in circulation, reliability of the network, speed of transactions, etc. These properties can be modified in certain cases.
In some cases, these properties can be modified to meet specific needs. This is the case with Bitcoin, which underwent a modification to give rise to a second cryptocurrency in 2017: Bitcoin Cash.
What are all the cryptocurrencies?
Today, there are around 15,000 active cryptocurrencies. But not all of them are popular, as only 20 of them dominate 90% of the market. The most popular today are:
- Bitcoin
- Ethereum
- Litecoin
- Tether
- Binance Coin
- XRP
- Cardano
- Dogecoin
- Bitcoin Cash
In reality, setting up a cryptocurrency is not a very complicated thing to do. As a result, many developers have taken the plunge and created their own virtual currencies. This explains the sharp rise in the number of cryptocurrencies in recent years.
There were already 70 cryptocurrencies in 2013, and the trend has been growing ever since. But why create so many crypto-currencies? To solve the problems encountered by previous cryptocurrencies.
Litecoin, for example, aims to make transactions faster than they are with bitcoin. Ethereum, the second-largest cryptocurrency, specializes in the development of decentralized applications, smartcontracts for the exchange of NFTs and more.
What is the purpose of a cryptocurrency?
The purpose of cryptocurrencies is first and foremost to facilitate the secure exchange of money while reducing transaction costs. Their characteristics justify their success:
Security
Most cryptocurrencies use blockchain technology, although there are others. Blockchain makes it much more complex to modify the transaction data entered into the system. In fact, a whole network of computers validates the information entered in the database.
The absence of human intervention during transactions considerably reduces the risk of error. In fact, blockchain functionality is one of the main reasons for the rise in demand. With blockchain, you can carry out transactions transparently and securely.
No fees
Since cryptocurrency transactions are not dependent on a central authority, their fees are lower than those of banks.
Profitable
The reason we’re hearing so much about cryptocurrencies these days is that they’re profitable. The hyperactivity of this market is leading many banks to invest in projects to adopt blockchain technology. The presence of these virtual assets will therefore only grow stronger over time.
Available
Last but not least, transactions last just a few minutes. They are possible 24 hours a day, 7 days a week and 365 days a year.
Where to buy cryptocurrencies?
Buying cryptocurrencies is becoming increasingly easy in 2022. There are now dozens of websites offering to buy and sometimes exchange cryptos on the internet. However, you need to check that the platform you choose actually offers the cryptocurrency you want to buy. The most popular are :
Binance
This is undoubtedly the benchmark platform for buying or exchanging cryptocurrencies. The site features several hundred cryptocurrencies. However, some of them cannot be bought directly in euros. So you’ll need to first acquire Bitcoin (BTC) or USDT and then exchange them for the desired cryptocurrency.
Kraken
A must for cryptocurrency purchases, Kraken is one of the oldest platforms that has never been hacked. However, it can be unavailable for some time, particularly when currency prices fluctuate widely.
Coinbase
Going public in 2021, this American platform is one of the most suitable if you’re just starting out with cryptocurrencies. It offers a fluid, intuitive interface via which you can buy around 50 different cryptocurrencies. Courses are also available on the platform to help you develop your cryptocurrency knowledge.
In addition to buying online, there are other ways to buy cryptocurrencies. These include exchange counters, ATMs and private sales. For this last option, it is advisable to make a physical exchange to avoid being scammed.
How do I buy cryptocurrencies?
The process for buying cryptocurrency depends on the platform used. On Binance , for example, you must first register and have your account validated by providing certain personal information. Once this step has been successfully completed, you’ll need to deposit funds in fiat and open a buy order for a base cryptocurrency. This can then be exchanged with the currency you actually want to buy.
The importance of following cryptocurrency news
The world of cryptocurrencies is evolving at a dizzying pace, bringing new economic prospects to the fore and redefining the traditional financial sphere. In this ever-changing context, keeping up to date is becoming an inescapable necessity for anyone wishing to skillfully navigate this ocean of digital possibilities.
- The inherent volatility of these digital currencies makes their market particularly sensitive to news.
- A regulatory announcement, the creation of a new technology or a simple statement by an influencer can cause major fluctuations in value.
- Anticipating these movements, thanks to assiduous monitoring, offers investors a significant competitive advantage.
Technological innovation, the backbone of blockchain and cryptocurrencies, is constantly coming up with new applications. Whether it’s decentralized finance (DeFi), digital collectibles (NFT) or new consensus methods, up-to-date information is the key to understanding and making the most of these cutting-edge innovations.
Beyond investment opportunities, the cryptocurrency ecosystem questions our relationship with money, sovereignty and trust. Getting informed also means taking part in a global reflection on the future of our society and tomorrow’s economic models. The road to the democratization of digital currencies is paved with major challenges, and every enlightened individual contributes to its development. So it’s easy to keep up with the latest crypto news.
Pingback: What is an NFT?