Cryptocurrencies or cryptocurrencies are digital currencies that have become very popular since the first, Bitcoin, came to light in 2009. Since then, many new cryptocurrencies have been created from the use or improvement of the technology applied in the first.
In this article from next markets, we want to teach you everything you need to know to stay updated on cryptocurrencies, from basic concepts to refresh your knowledge, to mention which are the most popular and best cryptocurrencies available on the market today.
What are Cryptocurrencies
Cryptocurrencies, cryptocurrencies, or digital currencies, are one more currency that can be used to make purchases or investments, just as we can do with the euro or the dollar, saving some differences that make them unique and differentiate themselves from fiat currencies. In addition to this, one of its main characteristics is that digital currencies are not regulated by any organization, entity, country, or government, which is why they can be purchased by anyone who has the necessary money for their purchase. Another interesting feature to highlight is that they are global currencies, that is, we can use them in any country and their value will remain the same.
History of digital currencies
In 2009, the world’s first cryptocurrency officially went on the market, Bitcoin. In its beginnings, the value of Bitcoin was practically zero and it was even given away so that people could learn about this new currency or it could be acquired as a reward for users of certain video games. The first transaction that was carried out with this cryptocurrency was the purchase of two pizzas for a value of 10,000 bitcoins, which was equivalent to a little more than 40 USD at that time. Of this first digital currency, there is no idea who its creator was, if it is a person or a group of them, it is only known that its creation is attributed to the pseudonym Satoshi Nakamoto.
Cryptocurrencies were created with the main objective of offering a global alternative to people around the world to be able to have their money on a more transparent platform than the existing options, since not being regulated by any particular organization, cryptocurrencies use a chain of blocks or the Blockchain to record each of its transactions, and in this way, guarantee users greater security by having all the movements registered in this kind of accounting book, which we will learn more about below.
What is Blockchain
The blockchain or chain of blocks, is a consensual record between the users of the cryptocurrency with which they are working, it is distributed in several nodes to form a general network. In a few words, the Blockchain works as an accounting book where all the operations and purchase and sale transactions made of a cryptocurrency are recorded.
Each digital currency has its own blockchain system, which are different in terms of configurations but the main objective is the same, to store in each block a number of valid transactions and records, plus information regarding that particular block.
Each block that makes up this extensive network has a specific place within the chain, this place cannot be substituted, that is, the block cannot be moved. The blocks are linked through hashing, a mechanism that allows them to be connected so as not to break the network. The chain also stores an exact copy of it in case a problem should arise.
The blockchain is open to users of the network, which means that anyone can see the transactions that have been made, which makes it almost impossible to duplicate a cryptocurrency, making the process more secure and transparent. However, even if you have access to all this information, you will not be able to see the real name of the person who sends or receives the money, only their username.
What is Cryptocurrency mining?
In the process of creating cryptocurrencies, we will also find another important concept that you should know in-depth, which is Cryptocurrency mining.
Cryptocurrency mining refers to the activity that is carried out to create new coins, which means that it is a process carried out by computers, which have the task of verifying the blocks and making the POW, in order to discover the hash and as a reward for this action, the system releases new cryptos that were locked. What it does is that, when the information blocks of the network are verified, the miner who managed to verify the transaction of those coins receives a reward with cryptocurrencies that are introduced to the market.
Mining is a very lucrative activity, it has generated large derivatives that are at all-time highs, which has led many people to start this activity or investigate how they can carry it out. The truth is that to become a cryptocurrency miner, you must have powerful computing equipment, mining equipment is not cheap and requires specific maintenance, however, if you have the knowledge and have said equipment, could generate great income.
Currently, there is something known as mining farms, mainly created by investors who have pooled their capital, where there is a large volume of computers that are dedicated 24 hours a day to trying to decipher the algorithm to mine cryptocurrencies. Because it is an activity that consumes a lot of electricity, these farms are usually located in countries where their prices are much lower and thus obtain more benefits.
Where can I have my Cryptocurrencies?
Cryptocurrencies or cryptocurrencies are stored in a digital purse, better known as a wallet. Cryptocurrency wallets are a kind of bridge that allows you to manage the digital currencies that we have. You can use different software or hardware depending on the wallet you have, but whichever one is used, they all have the purpose of receiving and carrying out the operations of sending these coins through the use of the chain of blocks or the blockchain.
In the market there are currently many options for digital wallets to store cryptocurrencies, some brokers even work as wallets as well. In turn, not all are the same, since depending on the server, different benefits or features will be offered. The most important thing when choosing a cryptocurrency wallet is to make sure of its privacy and security policies, as well as if it requires transaction fees and if it has any storage limits.
How many cryptocurrencies exist
Around the world there are already more than 10,000 digital currencies, from time to time a new one appears that originates from similar technology to those that already exist, they use a system known as ICO, which is when users are presented with a form of fundraising to capitalize and continue with its development. It is in the technology they use that we will see the great differences between cryptocurrencies since they are always trying to improve or provide new features and advantages to make the currency more attractive to users. Encryption and philosophy are also two great differentiating elements that exist between cryptocurrencies.
Every time new cryptocurrencies appear, new platforms for sending, buying, and receiving money also emerge, for example, Ethereum, Bitcoin Cash, and Ripple all have different platforms. The rise of cryptocurrencies is so great that even governments and renowned companies such as Tesla have begun to invest large amounts of money in cryptocurrency assets, which is why it is not surprising that more and more different types of cryptocurrencies appear every day. coins in the market.
The most popular Cryptocurrencies
As we have already seen, there is a huge number of cryptocurrencies available in the market, however, there are five that are still the favorites of users and those that are most used worldwide, these cryptocurrencies are the following:
Bitcoin Cash or also known as BCH. It is a well-known cryptocurrency also within the digital world, currently, it has a value of more than 600 USD. It appears for the first time in 2017, it is not only a cryptocurrency, it is also a payment network that was created as a result of a fork with Bitcoin, where the main objective was to increase the number of processable transactions.
Ether is a cryptocurrency launched on the market in 2015, it is the second most popular after Bitcoin and its current value is close to 2,000 USD. Most people know it as Ethereum, but the reality is that Ethereum is the technology or the blockchain network with which this cryptocurrency operates. Thanks to the boom that Ethereum has had as a system, new networks and cryptos based on its technology have been created from these. Another important thing that we can mention about this cryptocurrency is that it does not have a limit number as is the case with Bitcoin.
Ripple apart from being a cryptocurrency, it is also a platform. RippleNet is free software that uses a consensus system of its users, very similar to the chain of blocks or blockchains used by other cryptocurrencies. Ripple is based on P2P technology which means “person to person”. This technology was created and designed exclusively for Ripple by the American company Ripple Labs, founded by Chris Larsen and Jed McCaleb in 2012.
Ripple’s goal at the beginning was to make transactions much faster and at a low cost. In addition, this platform has its own currency, Ripple or XRP, which allows anyone to create their own cryptocurrencies thanks to its open-source protocol.
One Litecoin is equivalent to 225 euros for April 2021. This cryptocurrency allows instant payments and transactions to anyone anywhere in the world. Like Ripple, it uses P2P technology to operate without the need for a central authority figure. The network is what provides the management of transactions and the issuance of money, making it a safer and more transparent process.
We could not finish this list without talking about the most popular cryptocurrency of all, Bitcoin. Bitcoin was the first cryptocurrency to hit the market in 2009 and the first purchase made with this currency was two pizzas at Papa John’s. It was created by Satoshi Nakamoto, a pseudonym or the alias used by the creator(s) of this cryptocurrency. A Bitcoin for the year 2021 has a value of almost 54,000 USD. It must be remembered that this cryptocurrency has a limit of 21 million bitcoins, and currently, it is estimated that approximately 18 million have been mined.
Cryptocurrencies with more future
Although the virtual currencies that we mentioned above have great growth within the market and therefore a great future is predicted for them, we also want to talk about other cryptocurrencies that may not be so well known but that experts foresee will have a great development over time. Those cryptocurrencies are the following:
Dogecoin is a cryptocurrency that was born from nothing more and nothing less than a meme. The meme that became so famous in 2013, the Doge, a Shiba Inu dog in which grammatically incorrect phrases or funny phrases are added, is the one that gave rise to this new cryptocurrency. The programmer Billy Markus was its creator, an engineer who worked at IBM. For that year, Bitcoin had a bad reputation for being involved in businesses related to the dark web or the black market, that’s where Markus took the opportunity to create an alternative that had no relation to this incident. The name of this crypto came directly from the meme and the image of the dog is used as an illustration when referring to this coin.
As for technical data, Dogecoin is created based on Litecoin and works almost the same as other digital currencies. You need a program to solve algorithms and mine new coins, and it relies on cryptography, especially a program called Scrypt, which allows you to mine faster than other cryptocurrencies, such as Bitcoin. Currently, a Dogecoin is worth only $0.13.
This currency will begin to gain more notoriety in 2021 after Tesla CEO Elon Musk referred to it as the cryptocurrency of the people. Other celebrities such as Snoop Dogs and Simmons from the KISS band have also openly supported this new digital currency that has not stopped growing in recent weeks.
Like all cryptocurrencies, Nem also works based on a chain of blocks or blockchain, which stands out for having a truly innovative consensus algorithm and works based on user scores. These points are obtained each time the user reaches the threshold necessary to increase their score, which can be done through transactions, mining, or buying and selling operations.
It also uses a system called POI that seeks to stimulate users to not only obtain more XEM coins but also to carry out operations and movements with them. Something interesting is that it incorporated messaging into transactions, with the aim of communicating more securely when carrying out operations that require many parties involved.
How to invest in digital currencies by trading
Trading is a financial activity that basically consists of buying and selling assets listed on the stock market, these assets can be cryptocurrencies, shares, traditional currencies, indices, etc. This activity basically seeks to obtain a benefit through the operations that are carried out generating, said benefit is of course economic.
Trading with cryptocurrencies is understood as the purchase and sale of these digital currencies, that is, through taking a position at the price of a cryptocurrency against the price of a different currency. To make these transactions, it is essential to have a broker or intermediary, which is in charge of linking the two interested parties, the buyer and the seller, and in this way to be able to carry out the transaction in the fastest and safest way possible.
Why use CFDs to trade cryptocurrencies
CFDs or better known as contracts for difference are the most popular and efficient way of working cryptocurrencies since it allows their users greater flexibility when operating and also allow us the option of working with a procedure that is known as leverage.
Leverage allows us to invest or carry out an operation with more money than we really have, or it simply allows us the option of not using all our capital. To carry out this action, the user or investor will have to do it through a contract for difference with another party, such as their broker, which will provide a part of the value that they wish to invest and the user will cover the margin that is I requested. Thanks to leverage, the invested capital is reduced and the profitability of operations can be increased.
One of the good things about contracts for differences is that the trader can take advantage of market fluctuations, that is, the price change of cryptocurrencies. For example, if a trader believes that the price of Litecoin is going to rise, the smartest thing for him would be to open a CFD buy position, on the other hand, if he believes that everything will happen, he would most likely sell. CFDs.
If you are looking for a good broker to trade cryptocurrencies with contracts for different, we recommend our next markets platform. We are experts in the field and we have all the necessary tools to make your operations easier and faster, in addition to the fact that we do not charge commissions and we have customer service available to you at all times.
Cryptocurrencies are undoubtedly here to stay. They provide a new way of acquiring goods and services in a safe and modern way. Its main attractions are the fact that it is not controlled by a particular government or entity, and it is also global and can be used anywhere in the world.
Although the list of the best cryptocurrencies continues to be led by Bitcoin, Ether, Litecoin, Ripple, and Bitcoin Cash, there is no doubt that every day there are more emerging currencies that rise in position in the market thanks to the support of well-known figures and experts. , as is the case of Dogecoin and Nem. Although there are many cryptocurrency options, they all have in common that the best way to operate them if you want to invest is through a safe and reliable broker, an intermediary that offers the best commissions, tools, and the best possible service to be able to take advantage of the maximum each of the transactions we make.
The world of cryptocurrencies is impressive, and if you are passionate about technology and finance you cannot be left behind you have to know everything about this subject, so it is important that you continue studying and soaking up information and thus learning every day more of the currencies that are conquering the world.
Best Cryptocurrencies – Frequently Asked Questions
What was the world’s first cryptocurrency?
The first Cryptocurrency to hit the market was Bitcoin in 2009. Currently, its price exceeds USD 60,000 Is it a good idea to trade through CFDs?
The answer is yes, as long as you have the necessary practice and knowledge to be able to trade. The advantage of contracts for difference is that it allows us to invest larger amounts of money without the need to use all our capital, which is why it is an excellent option for those traders who have a little more experience and have strategies that make them get the most out of the operations they will open. Which is better Bitcoin or Bitcoin Cash?
Because they have different characteristics, it is not possible to choose between one or the other cryptocurrency, since both are good options for investment. For retail investors, Bitcoin is recommended for its rapid revaluation, while Bitcoin Cash has a higher block limit. What is the best broker to trade cryptocurrencies?
At Nextmarkets, we have an excellent broker service where we provide you with the best possible tools so that you can carry out your operations successfully. It will have a large number of tools, the platform is friendly and easy to understand, and in addition, we are enabled to work throughout the European continent thanks to having all our certifications up to date. Is there a cryptocurrency called EOS?
The answer is yes, it is currently the biggest competition for Ether since it uses a very sophisticated blockchain that many experts consider better than the one used by Ethereum, which is why this cryptocurrency is gaining so much popularity so far this year.