Cryptocurrency and blockchains are the two topics that always find their place in the financial news headlines. However, since its inception, cryptocurrency has witnessed several ups and downs to a point where volatility seems synonymous with it. Nevertheless, the digital currency has been prevalent among the new generation owing to its high return on investment and decentralized nature. Moreover, the upcoming technologies make digital currencies the foundation of their transactions, prompting more people to invest in digital currency.
The significant advantages of digital currencies are as follows:
- Decentralized- There is an absence of interference from any government regulatory body or financial institution when it comes to crypto transactions. The virtual currencies can be maintained through distributed networks. They get recorded on a digital ledger called the blockchain. As a result, blockchain technology has more appeal for cryptocurrency.
- Highly Secured- The safety and security of cryptocurrencies are maintained through a revolutionary system called cryptography. They are well-coded virtual assets that one can use to make payments effectively. Both proof of stake (PoS) and proof of work (PoW) are validation techniques used to verify the transactions, which both require the consensus of the majority of stakeholders.
- High return on investment- As cryptocurrency has a highly volatile nature, the value of some currencies spikes exponentially. So, it has attracted many investors to invest and trade in cryptocurrency and reap its benefits.
- Minimal transaction fees- As decentralized cryptocurrencies, minimal transaction fees get charged for international transactions. As a result, cryptocurrency has made it easier to make payments to the person sitting on the other corner of the world.
Many factors affect the value of digital currencies, such as :
- Supply & Demand- There are usually a fixed number of crypto units that the miners can mine. So, as the supply is limited, the demand increases, leading to an increase in the value of the cryptocurrency on the cryptocoins news.
- Competition- When the new cryptocurrency improves on the existing features of the current one and succeeds in gaining momentum, it can potentially drive the traffic that the current one is receiving.
- Cost of Production- It takes a great deal of investment to install high-tech computers to mine the virtual asset. Miners have to race to solve the math problems to verify a block due to which they need heavy equipment. In exchange, they get rewarded for their contribution. As the mining cost increases, the cost of production rises. So, the miners avoid mining the currencies whose value is insufficient to cover their production cost.
- Availability on Exchanges- If the currency is on more crypto app, it gets more visibility, influencing the demand for the digital currency.
Some leading crypto coins are Bitcoin, Ripple, Litecoin, Etherium, Solana, etc. You are not required to invest a large amount of money in starting your crypto journey. Even amounts as minimum as Rs. 100/- can be used to start investing in cryptocurrency. Thus, this leaves you with no excuse not to invest in the crypto market.