After the latest Bitcoin halving and subsequent bull cycle in 2020, there is yet another hype around the crypto market, but this time for all the right reasons. This bull market phase has changed a lot for crypto users, investors, and businesses as the newfound interest triggered the rise of a new wave of individuals as well as institutional investors that are interested in crypto.
If you initially thought like many that that crypto was nothing more than a pipe dream, but now you want a piece of the pipe, then keep reading. We cover everything a new crypto investor needs to know.
What is BlockchainTechnology
Blockchain technology is the bedrock of the crypto market. Without the development of blockchain technology, cryptocurrencies and any subsequent crypto innovation would not have been possible.
In a nutshell, blockchain technology is a distributed ledger technology, completely resistant to fraud and cyber-attacks. It is designed to function independently from any financial organization or authority, and it operates as a peer-to-peer-based database.
As it is a distributed database, it relies on complete transparency of the data, which means every data entry or alteration is viewable to the participants in the network. On the other hand, the identity of the participants is confidential. Therefore, anyone can safely and anonymously make deposits and withdrawals.
So, one of the main reasons for the success of blockchain technology was the introduction of a shared, immutable, transparent ledger that preserves the integrity of the data and its security measures that further cement the trust in the blockchain system.
That said, one of the main advantages of the blockchain network is that it is able to function entirely without the supervision or regulation of financial authorities, while the value of the cryptocurrencies is entirely based on the relationship between the market demand and supply, which makes the crypto market volatile but at the same time it’s the main factor which impacts the money-making potential of the cryptocurrencies.
The first cryptocurrency designed for blockchain technology was Bitcoin, while later, many other cryptocurrencies like Litecoin, Bitcoin Cash, and Ethereum were developed on innovative blockchain networks which are based on the same principles, but they all have distinguishable attributes that make the cryptocurrencies unique in their own way.
Crypto Trading Platforms
But, the development of the blockchain network didn’t solve the need for a crypto trading market where investors are able to trade cryptocurrencies or exchange crypto for fiat currencies and vice versa. This leads us to the development of crypto trading platforms.
Prior to the development of an online trading platform, crypto users exchanged cryptocurrencies on forums which were highly unreliable. The first trading site Bitcoin Market was created in 2010, and although now the platform is defunct, it marks the development of the crypto market.
As blockchain technology is decentralized, the crypto market is also distributed, which means today, you will find hundreds of different trading platforms which have specific features, but their main function is to help users safely trade cryptocurrencies and fiat currencies. On https://tradingplatforms.com/uk/cryptocurrency/ you can read more about the best crypto exchanges for UK crypto investors.
The main advantage of crypto trading is that you can easily find a trading site that is integrated with the crypto wallet. What’s more, most trading sites are mobile optimized with separate mobile applications that make crypto trading even more accessible.
Value of Cryptocurrencies
Before you decide to add cryptocurrencies to your portfolio, you should be aware that cryptocurrencies’ value can be highly volatile, although this can differ from one project to another, and it is based on the market demand and supply. This means that anything that minimizes the supply will have an impact on the price of the cryptocurrency. When the demand surges, for example, this can also increase the price. But because the market is decentralized can happen in just a couple of seconds. For instance, when Elon Musk tweeted in support of Dogecoin, its price rose significantly moments later.
This is why it’s important to do research and read the white paper of the crypto project and any other relevant information that you want to add to your portfolio. In contrast to real-world assets like stocks, there aren’t financial statements that can help with your decision. However, you can also check out the past price movements of any important trends if the cryptocurrency has been around for some time and make your decision from that point.
The crypto market will continue to attract more attention in the future because cryptocurrencies show a lot of potential not just for earning high ROI but also as a means of transferring funds over the Internet safely and quickly. As the crypto market is completely digitalized provides many opportunities for investors to invest in a variety of cryptocurrencies with just a couple of taps from their smartphone. But, it’s still up to the investor to do their research and add assets that align with their financial plan and goals.