Over the last few years, the cryptocurrency market has taken an important place in the online investment landscape, both from the retail and institutional investor sides. Despite the reluctance of governments and financial institutions to integrate virtual money into our lives, the inflow of money that goes into the crypto-market grows higher and higher every day.
What are cryptocurrencies?
Cryptocurrencies are digital money that only exists online through a code and is secured with cryptographic elements. Cryptocurrencies are based on a decentralized and peer-to-peer network called the “blockchain” which makes double-spending and counterfeit impossible. Unlike fiat currencies, the monetary supply of cryptocurrencies is not controlled by any central bank or government.
When were they invented?
Launched in 2009, Bitcoin is considered the first successful cryptocurrency. The token was developed during the economic crisis of 2007/2008, when people around the world lost their confidence in global financial institutions that were managing their money. Bitcoin’s creator(s) (Satoshi Nakamoto) wanted to provide an alternative for those wanting to take back the control of their money, become their own bank, and be able to make transactions without the need to provide proof, nor wait for an approval. That’s how the Bitcoin peer-to-peer decentralized electronic cash payment network was created.
What are the most popular tokens?
Since 2009, many other tokens have been launched. Today, there are more than 14,000 cryptocurrencies in the market. Of course, not all tokens are equal. As a beginner, you might want to focus on the largest ones, like Bitcoin (BTC), Ethereum (ETH), Binance Coin (BNB), Solana (SOL), Cardano (ADA) XRP (XRP), Polkadot (DOT), and Dogecoin (DOGE). If you want to consider other promising coins, you can have a look at the trendiest tokens, such as those linked to the or NFT (Non-Fungible Token) sectors.
What makes their price move?
Crypto trading is quite new, which means that it can sometimes be difficult to understand what makes their price move up or down. Still, there are some factors that seem to have a significant effect on cryptocurrency prices, such as the monetary supply of a token, blockchain updates and upgrades, data breaches and cyber-thieves, evolution of the regulatory framework around the world, inflation level of the largest economies, halvings, as well as trading psychology like the FOMO feeling.
How can you trade cryptocurrencies?
There are different ways you can take advantage of the cryptocurrency market, depending on your strategy and your goals.
Firstly, you can get direct exposure to the market by buying tokens through crypto-brokers or crypto-exchanges. Owning coins means that you can use them to buy services and goods, send money, or simply buy-and-hold as an investment. If you decide to buy cryptocurrencies, you will have to secure them in a wallet.
Secondly, you can get indirect exposure to this market by investing in companies offering services to this sector, like mining companies, blockchain startups, and firms offering services to the industry like services for traditional companies so then they .
You can also invest in ETF (Exchange-traded funds), ETP (Exchange-traded products), and other funds and trackers that are dedicated to cryptocurrencies. Another option is to buy shares of companies owning Bitcoin or other cryptocurrencies in their balance sheet, such as PayPal, Coinbase, Square, or MicroStrategy.
Finally, you can actively trade tokens through speculative financial products like CFD (Contract For Difference) which gives you the opportunity to take advantage of the price fluctuation of different tokens without owning them.