Chapter 1
All You Need To Know About Cryptocurrency
What Is Cryptocurrency?
Cryptocurrencies, also known as virtual currencies, are digital currencies
which are created and used by private individuals or groups.
Because most cryptocurrencies are not regulated by national governments,
they are classified as alternative currencies — mediums of financial
exchange that exist outside the scope of state monetary policy.
Bitcoin (BTC) is the most prominent cryptocurrency and the first to be
widely used. However, hundreds of cryptocurrencies exist, and new ones
emerge every month.
To distinguish them from the original, non-Bitcoin cryptocurrencies are
referred to as "altcoins.”
Most cryptocurrencies are functional variants of Bitcoin which is the first
widely used cryptocurrency.
Cryptocurrencies, like traditional currencies, express value in units — for
example, you can say, "I have 2.5 Bitcoin," just as you would say, "I have
$2.50."
Cryptocurrency users benefit from advantages which are not available to
traditional fiat currencies, such as the US dollar, and have the financial
systems that those currencies support due to their political independence
and essentially impenetrable data security.
For example, while a government can easily freeze or even seize funds held
in a bank account located in its jurisdiction, it is much more difficult to do
so with funds held in cryptocurrency — even if the holder is a citizen or
legal resident.
On the other hand, cryptocurrencies have several risks and drawbacks that
many fiat currencies do not have, such as illiquidity and value volatility.
Furthermore, because cryptocurrencies are frequently used to facilitate gray
and black-market transactions, many countries regard them with suspicion
or outright hostility.
While proponents tout cryptocurrencies as potentially profitable alternative
investments, few serious financial professionals regard most coins — with
the notable exception of Bitcoin and a few others — as suitable for anything
other than pure speculation.
Advice: Are you thinking about investing in Bitcoin or another
cryptocurrency? Coinbase is one of the most popular platforms for buying
and selling Bitcoin and other cryptocurrencies.
The Worth Of Cryptocurrency
According to CoinMarketCap.com, a market research website, over 10,000
different cryptocurrencies are publicly traded. And cryptocurrencies
continue to proliferate, with initial coin offerings or ICOs which are used to
raise funds. According to CoinMarketCap, the total value of all
cryptocurrencies on May 27, 2021, was more than $1.7 trillion, a decrease
from the April high of $2.2 trillion. The total value of all bitcoins, the most
popular digital currency, was estimated to be around $735 billion, down
from a peak of $1.2 trillion in April.
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