Let’s begin our journey to the world of cryptocurrencies, blockchains and money! In this series of tutorials, we will try to cover every topic related to cryptocurrencies and crypto-investing in India, in short, a complete guide to help the crypto-beginners.
What is a Cryptocurrency?
Let’s start by knowing, the basics of cryptocurrencies, and why you must know everything about cryptos before investing your hard-earned money in them.
As per Investopedia’s definiton, A cryptocurrency is a digital or virtual currency that is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend.
So, why are we not using cryptocurrencies as our regular money? The transactions are real quick, it has security, inflation or any economic disturbance will not affect it. Then, why not?
The answer is because it is not MONEY!
Cryptocurrencies are digital assets backed by cryptography’s security and blockchain technology, the normal aspects of conventional FIAT currencies do not apply to them. No one can back them, can set interest rates on them, in fact, the basic pillar of cryptocurrencies stands for decentralization. No one can regulate them and that makes them different from normal currencies and classifies them into “digital assets”, not digital money.
Now, why are people putting their money in this digital asset?
It is not accepted as a form of payment widely, although, after the launch of BitPay, some vendors started taking Bitcoin as a payment. But that doesn’t answer our question about Bitcoin’s recent price surge in the last decade.
Why are people investing in Cryptocurrencies?
Often referred to as “Digital Gold”, cryptocurrencies have so many qualities that make them attractive to people. They are in limited supply(most cryptocurrency, not all) and capped by mathematical algorithms, they are reliable and have a long-term store of value. But most importantly, what makes them different from fiat money is most cryptocurrencies can’t be influenced by any external body like political organs or government agencies. The value of cryptocurrencies can’t be diluted through inflation. Their price remains unaffected by any hyperinflationary events, disasters or bank failures, and these properties make cryptos one of the hottest deals of investment right now.
In the next chapter, we will talk about different types of cryptocurrencies, digital tokens, ICOs and much more.
If you are a beginner in the cryptocurrency space and wants to learn more and invest wisely.
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