Bitcoins are sold in the reverse order: Bitcoins are transferred to the Bitcoin address at the crypto exchange, where they are exchanged for traditional currencies and these are paid out via transfer to the reference account.
In addition to crypto exchanges, there is also the option of trading over the counter: via special institutes or directly with private individuals. However, particular attention must be paid to the risk of fraud or money laundering. If you are only interested in the performance, but not in the actual ownership of Bitcoin and the associated risks, some classically regulated financial institutions already offer financial platforms for this.
Key concepts of cryptocurrencies
Due to the complexity of these terms and our claim to offer you an understandable yet complete overview, we will only mention the most important keywords here. We will drop a deeper explanation later.
- Distributed Ledger Technology (DLT)
- Blockchain technology as a component of DLT
- Digital signatures
- Hash functions and Merkle trees
- Agreement algorithms such as proof-of-work or proof-of-stake
- Peer-to-Peer Networks
Cryptocurrencies and Blockchain (A Decentralized Accounting System)
Blockchain as the basis of cryptocurrencies-
Many cryptocurrencies are based on a blockchain. A blockchain is a distributed database. This means that the data in this database is distributed across many computers around the world. The data held on the blockchain are in turn the transactions. This makes a blockchain the decentralized accounting system for cryptocurrencies.
Such a concept for keeping and storing data has advantages: The data is stored on many computers. So if one or more computers fail, there are still many other systems that have the current state of the database.
A big advantage of a blockchain is its high availability and resistance to system failures.
Furthermore, a blockchain is largely tamper-proof. The individual computers in the network constantly synchronize their data. In order to manipulate a blockchain, at least 51% of all computers would have to have a wrong status.
Manipulation is therefore almost impossible. Because even if a sheet has been removed or changed from your folder, everyone else still has the correct version. The next time you compare it together, it would quickly become apparent that your version is not the right one.
Market in Cryptocurrencies
The total market capitalization of all cryptocurrencies on January 1st, 2017 was around 1,35,000 Crore Rupees. On October 3rd, 2020, the market capitalization was 25,00,000 Crore Rupees, around 18 times higher than at the beginning of 2017.
The so-called Bitcoin dominance shows how important and significant Bitcoin is for the overall market for cryptocurrencies. This sets the ratio of the market capitalization of Bitcoin to the market capitalization of all other cryptocurrencies.
Bitcoin dominance = market capitalization BTC / total market capitalization of all other altcoins
With a current Bitcoin dominance of 52.51%, BTC contributes 52.51% of the total market capitalization.
Cryptocurrencies as a Future security
Especially in times when Bitcoin or other crypto currencies are very popular, many people smell the “quick money”. When the price suddenly climbed to over 25 lakh Rupees almost overnight, there were suddenly a lot of Bitcoin millionaires. That in turn inspired others who also wanted to generate profit from it on high prices. The cryptocurrency prices fluctuate very strongly in some cases, so that even large profits can quickly vanish into thin air. If you want to use Bitcoin as an investment, you should treat it like any other high-risk business. You should only use money that does not hurt too much to lose.
And, if you have a crypto wallet, you should keep it in a form that will still be accessible in the distant future. At the end of 2020, reports made the people shocked about a Bitcoin millionaire who still had 1800 Crore Rupees in Bitcoin stored on an old hard drive. The catch: he couldn’t get the money. The hard drive was encrypted and he had forgotten the password.
Best Cryptocurrency to invest in 2021
Best cryptocurrency to buy now is Ethereum, Ripple, Cardano, Litecoin, Polkadot, etc. Such as Lite Coin price seems to be increasing very soon. Because these altcoins seem to have high potential in the upcoming cryptocurrency future, one should spend some of his savings to build a good number of holdings and portfolio.
