The bullish run of cryptocurrencies seems to be unstoppable as the importance of digital currencies with decentralized features is constantly increasing. Cryptocurrency is an independent computer-based coin secured by hashing algorithm and cryptography framework.
Cryptography and encryptions in a cryptocurrency network make it immune to counterfeit activities. However, most cryptocurrencies have come up with a finite supply since their start.
The possibility to double-spend cryptocurrency is nearly zero. The buying and selling actions of cryptocurrency are generally performed on a trustable cryptocurrency exchange.
To get a comprehensive overview of cryptocurrency trading, check how to boost profits from your bitcoin investment. The core concept of a cryptocurrency exchange is similar to a stock exchange.
But the cryptocurrency exchange is available 24*7. Undeniably, there are no third parties between a buyer and seller in a cryptocurrency network, but exchange works as a mediator between these two parties.
Reasons to invest in cryptocurrencies!
The analogy of mainstream cryptocurrencies is with large-cap stocks. BTC is a gold standard and is relatively stable than other virtual coins out of all the virtual coins. Therefore, while investing in cryptocurrencies, one can consider these virtual coins a long-haul investment.
Contrary to the inflation rate of fiat currencies, cryptocurrency bugs keep mentioning BTC as a commendable inflation hedge. Some countries like Canada consider bitcoin a commodity, and as a commodity, it is the least unstable cryptocurrency. The protocols of the bitcoin network cap the limit present in other virtual coins.
Also Read: 4 Mistakes Which Beginners do in Crypto Trading
Except for BTC, in which cryptocurrencies should one invest?
After BTC, in terms of market cap ethereum network is the largest. Unlike BTC, ethereum is a well-developed blockchain model. But the currency of the ethereum network, ether, has the second-largest market cap of over $400 billion.
Similar to bitcoin, ether has also been forked multiple times. Ethereum is popular because it allows a decentralized app on its model. Besides, ethereum, Solana, and Cardano are also exceedingly popular.
These three blockchain models have a robust future outlook and can bring significant changes to the DeFi, the end goal.
What is the role of a cryptocurrency exchange?
At the beginning phase of cryptocurrencies, there was no single evidence of cryptocurrency exchange. As cryptocurrency mining was easy, people acquired these digital coins by mining and even using peer-to-peer networks.
The first-ever cryptocurrency exchange was Coinbase, and it is still standing its ground. Coinbase is a popular and the largest cryptocurrency exchange and operates in many countries. The United States is the home ground of coin-based cryptocurrency exchange.
What should an investor know about a cryptocurrency exchange?
The majority of the cryptocurrency exchanges like Coinbase, Kraken, and Binance come up with hefty guidelines and regulations. The foremost aspect to check before opting for an exchange is whether the exchange operates in your region legally or not.
Even though a cryptocurrency exchange offers trading services in your country and is well-reputed, avoid investing every penny in a single cryptocurrency exchange.
Instead, investors should spread their investment in different exchanges like you spread butter on bread. Bad actors will take no time to access your cryptocurrency holdings if you opt for the wrong cryptocurrency exchange.
Also Read: Buy Cryptocurrency with Credit Card, an Easy and Transparent Purchasing Method
Centralized vs decentralized cryptocurrency exchange!
As the name suggests, Centralized cryptocurrency exchange comes up with heft regulations. Some popular centralized cryptocurrency exchanges are Coinbase, Kraken, and Binance. The advantages of using centralized cryptocurrency exchanges are reliability, security, and ease of use.
The disadvantage of centralized exchange is the involvement of a large number of the party. To transfer, buy and sell cryptocurrency, you will have to trust the parties performing these transactions. If you are a novice, always choose a reputed trustable centralized exchange.
Once you know how cryptocurrency exchange works, you can explore different kinds of cryptocurrency exchange. Centralized exchange and mining mainstream cryptocurrencies are only part of centralized cryptocurrency networks.
One can find ample options on the cryptocurrency exchange. The introduction of an Exchange-traded fund seems to be an excellent addition to the cryptocurrency network. ETFs will do the job of buying bitcoin and other digital currencies very easily.
These are some facts one should know about cryptocurrency exchange.
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