🔎 What are cryptocurrencies and how do they work?

Cryptocurrencies have many names. You've probably read about some of the most popular types of cryptocurrencies, such as Bitcoin, Litecoin and Ethereum. Cryptocurrencies are becoming increasingly popular alternatives for online payments.

Before you convert real dollars, euros, pounds or other traditional currencies into ₿ (the symbol of Bitcoin, the most popular cryptocurrency), you should understand what cryptocurrencies are, what the risks are when using cryptocurrencies and how to protect your investment.

Cryptocurrencies usually do not have a central issuing or regulating authority, but use a decentralised system to record transactions and issue new units. All cryptocurrencies are decentralized networks based on blockchain technology - a distributed ledger technology enforced by a heterogeneous network of computers.

🎓 IMPORTANT CONCLUSIONS

• A cryptocurrency is a form of digital asset based on a network distributed to a large number of computers. This decentralised structure allows them to operate outside the control of governments and central authorities.
• Some experts believe that blockchain and related technology will disrupt many industries, including finance and law.
• The advantages of cryptocurrencies include cheaper and faster money transfers and decentralised systems that do not collapse at the first failure.
• The disadvantages of cryptocurrencies include price volatility, high electricity consumption during the mining process and their use in criminal activities.

The cryptocurrency is so named because it uses encryption to verify transactions. This means that advanced encryption is required to store and transmit cryptocurrency data between wallets and public ledgers. The aim of encryption is to provide security and protection.

🎲 What are the risks when using cryptocurrencies?

Cryptocurrencies are still relatively new and the market for these digital currencies is very volatile.

Since cryptocurrencies do not need banks or any other third party to regulate them; they tend to be unsecured and are difficult to convert into a form of real currency (such as US dollars or euros).

Moreover, since cryptocurrencies are intangible technology-based assets, they can be hacked like any other intangible technology asset.

Finally, since you are storing your cryptocurrency in a digital wallet, if you lose your wallet (or access to it or backups of the wallet), you have lost your entire cryptocurrency investment.

⚙️ How do cryptocurrencies work?

Cryptocurrencies are based on a public distributed ledger called a blockchain, a record of all transactions that is updated and held by the holders of the currency.

Cryptocurrency units are created through a process called mining, which involves using the power of computers to solve complex mathematical problems that generate coins.

Users can also buy coins from brokers and then store and spend them using cryptocurrency wallets.

🧮 Blockchain

Central to the appeal and functionality of Bitcoin and other cryptocurrencies is blockchain technology. As its name suggests, the blockchain is essentially a set of linked blocks or an electronic ledger. Each block contains a set of transactions that have been verified by each member of the network individually.

Each new block created must be verified by each node before it is confirmed, making it almost impossible to falsify transaction history.

The contents of the electronic ledger must be approved by the entire network of an individual node or computer that maintains a copy of the ledger.

Experts say blockchain technology can serve many industries, such as supply chains, and processes such as online voting and crowdfunding.

Financial institutions, such as JPMorgan Chase & Co. (JPM), are testing the use of blockchain technology to reduce transaction costs by streamlining payment processing.

If you own cryptocurrencies, you don't own anything tangible. What you possess is a key that allows you to transfer a file or a currency unit from one person to another, without the need for a trusted third party.

🏦 Types of Cryptocurrency

Bitcoin is the most popular and valuable cryptocurrency. It was invented by an anonymous person called Satoshi Nakamoto and introduced to the world through a White Paper in 2008. Today there are thousands of cryptocurrencies available on the market.

• Ethereum: Ethereum, developed in 2015, is a blockchain platform with its own cryptocurrency, called Ether (ETH) or Ethereum. It is the most popular cryptocurrency after Bitcoin.
• Litecoin: This currency is more like bitcoin, but has moved faster in developing new innovations, including faster payments and processes that allow more transactions.
• Ripple: Ripple (XRP) is a distributed ledger system created in 2012. Ripple can be used to record various types of transactions, not just cryptocurrencies. The company behind it has partnered with various banks and financial institutions. Ripple is supposed to be a scalable, secure and sustainable central bank digital currency that meets the high security standards of central banks. Cryptocurrencies that are not Bitcoin are commonly known as "altcoins" to distinguish them from the original.
• One of the best known is the eos cryptocurrency. EOS is a blockchain-based platform for the development and use of decentralised applications (dapps), as well as access to smart contract features through its dedicated global infrastructure.
• The Stablecoins are cryptocurrencies whose value is linked to the value of another currency, commodity or financial instrument. Stablecoins aim to provide an alternative to the high volatility of the most popular cryptocurrencies, including Bitcoin (BTC), which has made cryptocurrency investments less suitable for common transactions. Truly stable stablecoin should have assets that maintain a stable exchange rate, preventing volatility. We could mention the USDT, USDC and the DAI coin among the most respected coins
• Some cryptocurrency exchange platforms issue their own cryptocurrencies. For example, the USD Coin released in 2018 by Centre, a joint venture between Circle and Coinbase, was created as a regulated stablecoin based on blockchain technology. Coinbase has acquired insurance coverage for their assets which reduces risks. The Binance Coin (BNB) is another example of a high-value cryptocurrency issued by a cryptocurrency exchange platform. With a market cap of over 37 billion Euros, it is an ideal case for this niche market.
• New cryptocurrencies: People and companies are issuing new cryptocurrencies every day. So it's quite difficult to estimate which one will shoot to the moon and which one will cost nothing in a few months or years. We are here to explain the basics of estimating the potential of each currency, so keep reading and you will probably save your cryptocurrency investments.

🏆 Advantages and Disadvantages of Cryptocurrencies

Cryptocurrencies were introduced with the potential to revolutionise the financial infrastructure. However, as with any revolution, there are trade-offs. At the current stage of cryptocurrency development, there are many differences between the theoretical ideal of a decentralised cryptocurrency system and its practical implementation.

Some of the advantages and disadvantages of cryptocurrencies are as follows.

👍 Advantages

• Cryptocurrencies represent a new, decentralised model of money. In this system, central intermediaries, such as banks and monetary institutions, are not necessary to enforce trust and police transactions between two parties. Thus, a cryptocurrency system eliminates the possibility of a single point of failure, such as a large bank, causing a cascade of crises around the world, such as the one caused in 2008 by the failure of institutions in the United States.
• Cryptocurrencies promise to make it easier to transfer funds between two parties directly, without the need for a trusted third party such as a bank or credit card company. These decentralised transfers are secured by the use of public and private keys and various forms of incentive schemes, such as proof of employment or proof of participation.
• Since they do not use third-party intermediaries, cryptocurrency transactions between the two parties are faster compared to regular money transfers. Flash loans in decentralized finance are a good example of such decentralized transfers. These loans, which are processed without the provision of collateral, can be executed within seconds and are used in trading.
• Investing in cryptocurrencies can generate profits. Cryptocurrency markets have skyrocketed in value over the last decade, reaching at one point almost 1.9 trillion Euros. In May 2022, Bitcoin was valued at more than 520 billion Euros in the cryptocurrency markets.
• The remittance economy is experiencing one of the most notable use cases of cryptocurrency. Currently, cryptocurrencies such as Bitcoin serve as intermediary currencies to streamline money transfers across borders.

Thus, a fiat currency is converted into Bitcoin (or other cryptocurrency), transferred across borders and then converted into the fiat currency of the sending destination. This method streamlines the money transfer process and makes it cheaper.

👎 Disadvantages

• Although they claim to be an anonymous form of trading, cryptocurrencies are actually pseudonyms. They leave digital fingerprints that agencies such as the Federal Bureau of Investigation (FBI) can decipher. This enables governments or federal authorities to monitor the financial transactions of ordinary citizens.
•  Cryptocurrencies have become a popular tool for criminals for malicious activities such as money laundering and illegal purchases. The case of Dread Pirate Roberts, who ran a website for selling drugs on the dark web, is already notorious.
• Cryptocurrencies have also become a favourite of hackers who use them for ransomware-related activities.
•  In theory, cryptocurrencies are supposed to be decentralised, with their wealth distributed between many parties on a blockchain. In reality, ownership is highly concentrated. For example, an MIT study found that just 11,000 investors owned about 45% of Bitcoin's galloping value.
• One of the shortcomings of cryptocurrencies is that anyone can mine them using a computer with an Internet connection. However, mining popular cryptocurrencies requires a lot of electricity, sometimes as much as entire countries use. Expensive energy costs combined with the unpredictability of mining have limited mining exclusively to large companies, whose revenues amount to billions of euros. According to an MIT study, 10% of miners account for 90% of mining power.
• Although cryptocurrency blockchains are highly secure, other cryptocurrency repositories, such as exchanges and wallets, can be compromised by hackers.
• Many cryptocurrency exchanges and wallets have been compromised by hackers over the years, sometimes resulting in millions of euros worth of "coins" being stolen.
• Cryptocurrencies traded on public markets suffer from price fluctuations. Bitcoin has experienced rapid spikes and drops in value, climbing as high as €16,670 in December 2017 before falling to €7,120 in the months that followed.
• Consequently, some economists consider cryptocurrencies to be a short-lived fad or speculative bubble.

💡 How do you buy Cryptocurrencies?

Any investor can buy cryptocurrencies from popular cryptocurrency exchanges such as Coinbase, apps such as Cash App or through money brokers.

Another popular way of investing in cryptocurrencies is through financial derivatives, such as the CME's Bitcoin futures, or through other instruments, such as Bitcoin trusts and Bitcoin ETFs.

You may be wondering how to buy cryptocurrencies safely. There are usually three steps to follow. These are:

🥇 Buying cryptocurrency: step 1: Choosing a platform

The first step is to decide which platform to use. Generally, you can choose between a traditional broker or a specialized cryptocurrency exchange:

1. Traditional financiers. These are online brokers that offer ways to buy and sell cryptocurrencies, as well as other financial assets such as stocks, bonds and ETFs. These platforms tend to offer lower transaction costs but fewer features in terms of cryptocurrencies.
2. Cryptocurrency exchanges. There are many cryptocurrency exchanges to choose from, each offering different cryptocurrencies, wallet storage, interest-bearing account options and more. Many exchanges charge fees based on assets.

When comparing different platforms, consider which cryptocurrencies are offered, what fees they charge, their security features, storage and withdrawal options, and any educational resources.

🥈 Step 2: Funding your Account

Once you have chosen the platform you want, the next step is to fund your account so you can start trading.

Most cryptocurrency exchanges allow users to buy cryptocurrencies using fiat currencies (i.e. government-issued currencies), such as the US dollar, British pound or Euro, using their debit or credit cards - although this varies depending on the platform.

Cryptocurrency purchases with credit cards are considered high-risk and some exchanges do not support them. Some credit card companies also do not allow cryptocurrency transactions. This is because cryptocurrencies are highly volatile and it is not appropriate to risk being charged - or potentially paying high credit card transaction fees - for certain assets.

Some platforms also accept ACH transfers and wire transfers. Accepted payment methods and the time required for deposits or withdrawals vary by platform. Similarly, the time required to clear deposits varies depending on the payment method.

An important factor to consider is the fees. These include possible transaction fees for deposits and withdrawals as well as merchant transaction fees. Fees vary depending on the payment method and platform, which should be researched at the outset.

🥉 Step 3: Placing an order

You can place an order via the online or mobile platform of your broker or exchange. If you intend to buy cryptocurrencies, you can do so by selecting "buy", choosing the order type, entering the amount of cryptocurrencies you want to buy and confirming the order. The same procedure applies to "sales".

There are other ways to invest in cryptocurrencies. These include payment services such as PayPal, Cash App and Venmo, which allow users to buy, sell or hold cryptocurrencies.

⛏ Can you produce cryptocurrencies?

Cryptocurrencies are produced by mining. For example, Bitcoin is produced by mining Bitcoin. The process involves downloading software that contains a partial or complete history of transactions that have taken place on its network.

Although anyone with a computer and an Internet connection can mine cryptocurrency, the energy- and resource-intensive nature of mining has resulted in large companies dominating the industry.

For a solo investor, it is better to buy cryptocurrency and store it until the time when its price will increase significantly.

📈 Current cryptocurrency prices

In order to get a taste of the world of cryptocurrencies, it would be useful to familiarise yourself with the most widely used assets in the space. Below is a list of the largest cryptocurrencies by market capitalization.

🧿 SHORT LIST OF PROS AND CONS

💨 Why do we see so many fluctuations in cryptocurrency prices?

The cryptocurrency market is still in its infancy. Η cryptocurrency market is still considered very new and, beyond hearing the term "cryptocurrency", most people are still not particularly familiar with the industry.

Emerging markets have certain properties that make them inherently volatile.

The liquidity of the cryptocurrency market is limited when compared to more established markets such as traditional economies, including the foreign exchange market. To put it globally, the total value of all the money in the world is over 84 trillion Euros, while the total capitalisation of the cryptocurrency market is around 233 billion Euros - a difference of 36,000 percent.

The daily cryptocurrency trading volume is around €13 billion, while daily forex transactions are close to €4.7 trillion.

The spread - the difference between the buying price and the selling price - on foreign exchange transactions will be a few cents at most, while spreads on cryptocurrency transactions can reach up to a few euros.

All this points to a very thin market that naturally moves very fast and thus increases the volatility of cryptocurrency prices.

Every day, a large number of new users join the market. At the beginning of 2018, cryptocurrency exchanges reported that 100,000 new users were being added every day.

Many of these members will have a significant vested interest in the rise or fall of the price of cryptocurrencies, which adds to the disruptive nature of the market and further increases volatility.

Finally, price manipulation may be common in emerging markets. Central exchanges control most of the flow of cryptocurrencies, giving them many incentives to increase their revenues by artificially manipulating cryptocurrency prices.

One way in which they can do this is to manipulate the pricing that occurs on the exchanges, encouraging traders to either buy or sell.

🏷 Real-time cryptocurrency prices #cryptocurrency prices live live#

If we had to make a list of some of the most flammable elements in the world, the one that would surpass even Mercury is cryptocurrencies.

Our tool will help you find cryptocurrency prices, cryptocurrency values in terms of market capitalization and the cheapest cryptocurrency to buy. Our cryptocurrency price checker is also available in US Dollars, Euros and GBP.

Since the circulation of cryptocurrencies, they are among the most fluctuating and volatile objects in the world, seeking to understand what cryptocurrency is.

If you choose to buy cryptocurrencies, there is an option for each cryptocurrency. Here, you will find a more detailed chart to check the prices of cryptocurrencies. You'll also find tools that show you the cryptocurrency market climate, a brief description of the cryptocurrency and links to its official website and white paper(whitepaper).

Almost all investment enthusiasts have tried to find out why cryptocurrencies fluctuate and what causes cryptocurrency fluctuations. Some questions that are often on everyone's mind are why bitcoin fluctuates so much, what is the upper limit of buying cryptocurrencies, predicting the price of Cardano and how to turn market statistics into insights that would make an investment successful. We are simply trying to fill in these gaps with consumer behavior and trends.

The value of cryptocurrencies is volatile and can go down or up, so check the prices before you buy. Check our guide on how cryptocurrencies work.

Here you will find a more detailed chart to check the cryptocurrency values.

You will also find tools that show you the cryptocurrency market climate, a brief description of the cryptocurrency and links to its official website and whitepaper.

⛅️ This is still the MARKET... Can I find cryptocurrency predictions?

Why Do Cryptocurrency Prices Fluctuate So Much? A one-sentence answer to the question of what drives the price of cryptocurrencies would be - because the market is still in its nascent stage.

Cryptocurrencies, as a market that has not yet settled on a set of reasonable uses, are still at a very early stage. And the result of this youth is the high volatility in the industry, which is mainly due to the increased experimentation that investors are doing to get a sense of how cryptocurrency prices fluctuate, or why does bitcoin fluctuate so much?

Fundamental Analysis (FA) is a methodology used by investors to develop the intrinsic value of a resource or business. Their primary objective is to decide whether the resource or business is undervalued or overvalued based on a number of external and internal factors. Investors can then use this data to strategically enter or exit positions.

You will probably come to a conclusion about whether the resource is undervalued or overvalued. At this stage, you can use your knowledge to update your trading positions.

For example, on the Analytics Insight website, Sanyal says that market analysts predict that Bitcoin could reach €93,000 by the end of 2023, while others say it could climb to that amount in the first quarter of 2023. Others write that Bitcoin will not surpass €65,000 by the end of 2023.

James Putra, head of product at TradeStation Crypto, is the most optimistic about Bitcoin (BTC) with his year-end forecast being €56,000. He claims that the price of BTC will skyrocket as it will be easier for retail investors to trade as more and more brokerages will cater to the cryptocurrency market.

Meanwhile, Gavin Smith, CEO of hedge fund Panxora DeFi, Desmond Marshall, CEO of Rouge International, Vichal Sa, CEO of Alpha5, Adele de Mayer, co-founder of the DAPS currency and John Hawkins, lecturer at the University of Canberra, predicted year-end prices below €9,300.

You see, there are so many cryptocurrencies predictions that conflict with each other. And this is only for the main cryptocurrency - Bitcoin(BTC). There are different predictions for other cryptocurrencies. We are trying to collect them and publish them. But keep in mind, you are responsible for your strategy and the risks you take.

💹 Do you buy, sell or store Bitcoin?

When asked if now is the time to buy, sell or store Bitcoin, the majority of panelists (54%) answered that it is time to buy. Some 39% say it is best to save, while just 7% say it is time to sell.

"By adding Bitcoin to your portfolio monthly, you have a viable strategy to secure a significant access to Bitcoin while being less vulnerable to short-term price fluctuations," he says.

At the same time, the 39% panel, including David Derhi, cryptocurrency commentator at eToro, says it's best to save.

"Bitcoin is currently trading around 9300€. As long as Bitcoin is maintained at this level, investors should consider storage as we are still in the early days of this technology and assimilation is increasing. I expect to see another upward trend in cryptocurrency prices."

Most cryptocurrency ventures are not like conventional organisations. You don't have a wealth of information with all the price history of cryptocurrencies to filter through, as you would with conventional stocks.

There are a number of factors to which you should pay particular attention when analysing an investment:

•         Buying public
•         Demand, tokenomics and utility
•         Traffic/growth
•         Partnerships
•         Market capitalisation
•         Comparison with competitors
•         Community reviews
•         Status and active users
•         Price history and age
•         Real world use case
•         Liquidity and volume
•         Regulations

        

🎰 Factors Affecting the Movement of the Cryptocurrency Price in the Market

The factors affecting the price of cryptocurrencies could range from the scope of cryptocurrencies in the present to the future uses of cryptocurrency and a number of other interconnected elements concerning the development of the cryptocurrency economy. Here are some of the reasons for the price movement in the cryptocurrency market.

1. Usefulness of Coins

Any reputable Blockchain technology company would tell you that a cryptocurrency should have a strong use case in order to incentivize people to store the coins.

Let's take Ethereum as an example to explain it better. In order to execute commands and develop applications on the Ethereum blockchain, one would need ETH to convert it into gas and become the "fuel" of Ethereum.

So, the more people who execute transactions and develop applications, the higher the demand for ETH will be and the higher the prices in the cryptocurrency market will be. The current price of ethereum is 3336.58 Euros. In summary, the greater the role of cryptocurrencies, the greater the capitalization of the cryptocurrency market will be.

2. Rarity

Rarity indicates the finite mechanism of cryptocurrencies.

In economics, a steady supply of any item increases its value in the long run, because it is assumed that demand will also increase. This, in turn, creates scarcity, as there are limited currencies in circulation.

Some chips even use a subtraction mechanism, i.e. they destroy part of the quantity of coins. This in turn increases the value of the coins, as there is less coin supply.

3. Estimated Value

The price of a cryptocurrency can be as high as the market deems it to be, and the market evaluates it based on factors that are at the heart of the project's development. Here are some factors that determine the value of projects -

One that constantly achieves the milestones mentioned in the white paper of the

Partnership and cooperation with reliable companies

Release of MVP or beta version

The evolution of cryptocurrency values and the cryptocurrency market

4. Inflation of the Fiat Currency

When the price of the reference currency falls, the price of the cryptocurrency increases relative to that currency. This is because you will be able to acquire more currency with your cryptocurrencies.

5. Whales

As the term suggests, the whales are those Bitcoin wallets that hold around €930,000. These make it very difficult to place any expected value on the cryptocurrency.

As Per Wimmer, founder of Wimmer Financial LLP explains, "The cryptocurrency market is dominated mainly by ten big whales or individuals. They are huge in the market and take up a lot of space and volume, so if you take the top 10 or even the top 50 you've already covered a lot of the volume. It's very easy to manipulate the market so far."

This technology is poised to revolutionize the market with the way the growth in bitcoin wallet app costs and current cryptocurrency prices are moving in this niche market.

👛 How to save cryptocurrency

Once you buy cryptocurrency, you must store it in a safe place to protect it from hackers or theft. Typically, cryptocurrencies are stored in cryptocurrency wallets, which are either physical devices or web-based software used to securely store the private keys of your cryptocurrencies.

Some exchanges provide wallet services, making it easy for you to save directly through the platform. However, many exchanges or brokers do not automatically provide this service.

There are various wallet providers to choose from. The terms "hot wallet" and "cold wallet" are used:

Storage in a warm wallet: The term "hot wallets" refers to the online cryptocurrency storage software used to protect the private keys of your assets.

Storage in a cold wallet: Unlike hot wallets, cold wallets (also known as hardware wallets) rely on offline electronic devices to securely store your private keys.

Typically, cold wallets tend to charge fees, while hot wallets do not.

🔒 Are cryptocurrencies safe?

Cryptocurrencies are usually made using blockchain technology. The blockchain describes the way in which transactions are recorded in "blocks" and time-stamped.

It's a fairly complicated, technical process, but the result is a digital cryptocurrency transaction ledger that is difficult for hackers to tamper with.

In addition, transactions require a two-factor authentication process. For example, you may be asked to enter a username and password to initiate a transaction. You may then be required to enter an authentication code sent via text message to your personal mobile phone.

🛍 What can you buy with cryptocurrencies?

When it was first released, Bitcoin was intended to be a medium for everyday transactions, making it possible to buy everything from a cup of coffee to a computer or even large items such as real estate.

This has not yet been achieved and, while the number of organisations accepting cryptocurrencies is growing, large transactions are rarely made with it. Even so, it is possible to purchase a wide variety of products from e-commerce sites using cryptocurrencies. Here are some examples:

Technology and e-commerce websites:

Several companies that sell technology products accept cryptocurrencies for transactions on their websites, such as newegg.com, AT&T and Microsoft. Overstock, an e-commerce platform, was one of the first websites to accept Bitcoin. Shopify, Rakuten and Home Depot also accept cryptocurrencies.

Luxury goods:

Some luxury retailers accept cryptocurrencies as a form of payment. For example, online luxury retailer Bitdials offers Rolex, Patek Philippe and other high-end watches for Bitcoin.

Cars:

Some car dealers - from mass-market to high-end luxury brands - already accept cryptocurrency as payment.

🛡️ Follow these tips to protect your cryptocurrency:

Be careful before you make your move! Before you invest in a cryptocurrency, make sure you understand how it works, where it can be used and how to exchange it.

Study the websites for the currency itself (such as Ethereum, Bitcoin or Litecoin) to fully understand how it works, and also read independent articles about the cryptocurrencies you are considering investing in.

Use a reliable wallet. You'll need to do some research to choose the right wallet for your needs. If you choose to manage your cryptocurrency wallet with a local app from your computer or mobile device, then you'll need to protect that wallet to a level that matches your investment.

Just as you wouldn't carry a million euros in a paper bag, don't choose an unknown or lesser-known wallet to protect your cryptocurrency. You should make sure you use a trusted wallet.

Have a plan B. Think about what would happen if your computer or mobile device (or wherever you store your wallet) is lost or stolen, or if you lose access to it anyway. Without a plan B, you will have no way to get your cryptocurrency back and potentially lose your investment.

🏁 SUMMARY

If you buy or mine cryptocurrency, you must store it. You can keep it at an exchange or in a digital wallet. While there are different types of wallets, each has its advantages, technical specifications and level of security. As with exchanges, you should explore options for storing cryptocurrency before investing.

Investing in cryptocurrencies is risky, but it can be a good investment if you do it right and as part of a diversified portfolio. Cryptocurrencies are a good investment if you want to gain immediate access to the demand for digital currency.

❤ Frequently Asked Questions About Cryptocurrency Price Movement