Why trade in cryptocurrencies in 2021

Cryptocurrencies and bitcoin, particularly, have been making some money in the past few months. not to mention the GameStop and Reddit revolution. These things can be closely related to the market as it runs on emotions. Bitcoin has been creating a roller coaster for emotions since the market around it started being volatile. 

But why is bitcoin relevant here? Isn’t it the costliest share for crypto? Yes, it is.

But the relevance does not lie in the stock. It lies like stock. Bitcoin is not a big name because the market wants it to. It has climbed up to a position that no other cryptocurrency ever could. But why? Why would that happen?

Bitcoin inception

There was a time when the market was flooded with banks; it still is. But when bitcoin came into the picture, people were instantly fascinated with the whole idea of the non-involvement of banks in the loop. 

Some people argued that the whole system could be a fraud, but the creator came up with blockchain. The reason for stocks being skyrocketing is why no one hacks into bitcoin and the reason for the existence of companies like Ripple. 

The whole idea of bitcoin was based on the pillar that transactions must be transparent and be reflected in real-time while keeping the entire process strictly Peer-To-Peer. Blockchain is how they did it.

To understand cryptocurrencies, you must learn about some technical terms like encryption, SHA 256 Algorithm, miners, blah blah blah. Boring.

Let’s make it a little more interesting. 

Encryption, as we saw

Remember the movie The imitation Game? That movie was based on how Hitler and his armies would talk to each other, and then Alan Turing broke that code. People often forget how immensely talented he was. Nevertheless, that’s how it ended, with a pinch of probability, but that was the most of it. Probably that is when everyone realised that what things were possible over waves and propagation. 

How it evolved

When the internet came into power, encryption came into play more. There was a time that saw the inception of encryption technologies, and now there are so much in our lives that we don’t realise.

In simple Bitcoin terms, Encryption is used when two parties exchange the coins with each other; it is hidden from the world that exists outside those two parties. The executing code, and a crucial one, is converted into a different text altogether. This is pure gibberish to the average human eye, but for those two systems. It is all they need.

That is what encryption is, and the process where the whole text conversion thing happens is called hashing, don’t misinterpret it with the drug. 

So, encryption is a way to hide messages, and the world has evolved from Enigma to Hashing. SHA algorithm uses 256 bytes of computer memory to encrypt a message, and the SHA stands for the secure hash algorithm. That is all you need to know if you want to see the stock, not the tech. 

Some more nerd-talk

Now, let us talk about miners. Miners are the coders who mine the code for bitcoin. Here, you will also learn about nodes because that is important. 

Nodes are the systems that operate the codes of bitcoin, and also, Nodes circulate a computing puzzle to the miners that have to be solved to receive some bitcoins, which are circulated further in the market. 

What is the code of bitcoin? That is neither important nor can we accurately tell that. But what’s essential is the puzzle part. Now, these puzzles are so hard that people need super colossal computing power to solve them. As mentioned, when they solve it, they receive some bitcoins and separately, they receive an incentive in bitcoin itself. So it’s a big, very big money game. 

This is what happens behind the curtain. Now let us come to the frontier. 

When two parties exchange bitcoins, or let’s say, when someone makes a payment on bitcoin, the whole thing is recorded on the blockchain. 

BlockChain, Austin to Biden

We have already discussed that blockchain is the reason why bitcoin and some other cryptocurrencies exist. 

The blockchain, in reality, is a ledger that records everything and applies a time stamp on it. What the stamp does is that it makes it uneditable. Everyone can see what happened, but no one can change that information. ‘

Blockchain is so cool that nerds surf back to the first transaction that was ever recorded and flaunt it. 

Since everything is encrypted, there is no bank involvement, and everything is right in front of everyone; bitcoin is one of the biggest stocks and a standard definition of cryptocurrencies. 

But is that all?

Is that all that people get from such fascinating technology? 

Nope. That is not it.

The PUBG analogy

In the top-rated FPS game PUBG, apart from surviving for the longest, the players also have to be in a specific space. Stay out of that space for too long, and you will bleed out. If this constraint is not respected or the game did not have it in the first place, people would hide on different island spots, and the whole game would become too dull to play.

Bitcoin has the same catch. You see, there will only be a certain number of bitcoins that will ever see the market. With that constraint, the tech makers eliminated the possibility of inflation that is a considerable risk for fiat currencies.

If there will be only a specific number of coins that would ever be mined, there will be no inflation. Technically speaking, the currency will already be in the market but would soon be able to compete with the growing demand it has.

Market talks

Now comes the part where we talk about the market. The way bitcoin has grown and how Ripple sees its ruptures shows that bitcoin stays as the best bet for investors.

Since it has such a huge value (more than 33K as we write this), people have started using it as a hedge investment. While no one knows or at least thinks that it will lever plummet, everyone seems to have this faith in cryptocurrency. 

Against the fear of the SEC lawsuit, coinbase has barred Ripple. Paypal and a few more allow people to buy, sell or hold cryptocurrencies through the respective applications. The way the market is uneven around crypto, one this is for sure, people who know what they are doing are investing in straight coins online. 

The benefits are immense, so are the losses. Almost all of the transactions on the dark web happens through bitcoins; since it cannot be traced back to its exact origin, the trade from both th sites remains anonymous. 

People are also looking at BTC for investments because it is getting recognition as a replacement to forex. Since there is no fiat or physical cash, in particular, the transactions can be done without the need of each person changing the currency in the receiver’s known fiat. Lower transition cost always comes into play as bitcoin does, and bitcoin offers lower transaction cost. The same Ripple is four times lower than that of BTC.

Conclusion

The crypto market is volatile and not just BTC; at least 1500 different digital currencies are available. If you want to invest in this sector, we advise that you undergo proper research before investing real money into the market. Always remember, the correct math will give you the right trades, not the gut. 

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