Even if you’re not familiar with cryptocurrency, you’ve most likely heard it somewhere on the digital verse. Wherever or whoever you heard it from, the only thing that matters now is you are here and BTCPost will guide you on how cryptocurrency works and its current status in the market.
A cryptocurrency is a medium used to exchange digital assets with anyone across the globe. It uses a blockchain technology that allows users to transfer money with ease and all transactions are secured by cryptography. Some of the largest cryptocurrencies that contribute to the entire cryptomarket include Bitcoin, Ethereum, Ripple or XRP and more.
The cryptomarket is important in the world of crypto space. Similar to how businesses operate, they value the market and produce goods in accordance to their needs. When these companies accumulate the trust of the end consumers, these target markets will patronize the brand and spend more money on their products. This flow also happens in the cryptomarket.
Since there are several cryptocurrencies competing to become the best in the world, they provide distinguishable features that would differentiate them from their competitors. When their products are utilized and supported by the public, the cryptomarket will grow and continuously increase in price. The more people who are willing to invest in the platform, the more will the crypto space become a norm and a necessity in the future.
Now that you know how the cryptomarket works, let’s dive deeper into the world of cryptocurrency in the next section. Learn more about market capitalization, stable coins, expert prospects about the cryptomarket by the end of 2020 and other cryptocurrency updates below.
Cryptomarket: Rapid growth and hassle-free transactions
As of writing, the global crypto market capitalization has a total of $333.94 billion pioneered by Bitcoin sold at $10,583.70 per coin. Meanwhile Ethereum, Tether and XRP comes next after the largest cryptocurrency. Bitcoin accumulated $196.1 billion market cap share on the total alongside Ethereum with $37.97 billion, Tether with $15.62 billion, and XRP with $11.01 billion.
Cryptocurrency is not only limited to trading money across the globe, but you can also purchase and sell your coins for a higher price. This serves as your digital asset that can grow overtime depending on the trends in the market. The more the market grows, the higher the price will be for each invested money in your crypto wallet.
In 2017, the cryptomarket experienced a large increase of bought tokens that sums up to thousands of percent which until now hasn’t been broken yet. Although the world faces a global crisis in 2020, cryptocurrencies are still on the rise and it’s better to buy coins this year since it generated a total of 40% increase compared to the previous year’s market cap.
With all this information, perhaps you’re wondering how the cryptomarket remains stable after all these years. Here are the following factors that drive the cryptomarket onto its peak:
Stablecoins have also been in the cryptocurrency news for several years now. It is a digital asset that allows fiat currencies or commodities as back-up for money invested in crypto wallets. To make it simpler, stablecoins exchange the value of fiat currencies to digital in the crypto space, making the purchasing power of stablecoins vary depending on its traditional back-up assets. It stabilizes the cryptomarket unlike Bitcoin, Ethereum, and XRP coins that can experience fluctuations anytime.
Many people are still skeptical about how cryptocurrency works since they can change in just a split second. The amount of money received by your recipient may possibly not be the exact amount you wired before the transfer and this situation is what makes several people scared to invest in cryptocurrencies. They fear that they won’t get their money back in case the market drops immensely.
However, with stablecoins, you don’t need to worry about fluctuations because your purchasing power will remain intact as long as your back-ups are still of the same value. Even if you wire it to another account, the recipient will collect the exact money you sent during the transfer.
Stablecoins fall under three categories such as fiat-backed, crypto-backed and algorithmic stablecoins. As mentioned above, stablecoins that use fiat currencies as back-up are part of the fiat-backed category or also called as fiat-collateralized stablecoins. Your traditional assets are handled by an authority and they will only release a set of coins depending on the value of your fiat currency.
On the other hand, crypto-backed stablecoins involve making your cryptocurrency the back-up monetary for your stablecoins. However, these stablecoins are not entirely used because people doubt the cryptocurrency’s security. Instead of your money being handled by a single authority, the value of your stablecoins will be determined by all participants in the network.
Lastly, the algorithmic stablecoins. It doesn’t use any fiat or cryptocurrency back-ups but it is entirely managed by algorithms and smart contracts that determine how many tokens will be issued into your account. It also stabilizes the market through liquid digital bonds that widen the supply of stablecoins.
DeFi or also known as decentralized finance. It is similar to the process of how cryptocurrency works. Decentralized finance allows users to directly transact with other people across the globe or simply purchase goods and services without the need of a middleman. These middlemen are financial institutions that hold power to the user’s money before releasing it to the recipient. DeFi assists users to exchange currencies to different currencies with ease in a fast and reliable transaction.
As the cryptomarket continues to grow, the market capitalization experienced an increase of 60% in the third quarter of 2020, accumulating a total of $40.5 billion by the end of September. DeFi aims to provide a viable alternative for users to pay their financial commitments online such as loans, insurance, savings and more. Whenever and wherever you are, you can access all of these in just one click.
Similar to Ethereum, DeFi is also run by smart contracts where you can set conditions before the money can be transferred to your recipient. In simple terms, you can indicate that your coins can only be wired once it becomes rainy on the 26th of the month as per the weather forecast on your smartphone. In case it didn’t happen, then your money will still be intact. Similar to other business transactions, they input variables on contracts that
will be beneficial for both parties. Some of the well-known DeFi applications include Decentralized exchanges (DEXs), lending platforms, wrapped bitcoins (WBTC) and stablecoins. To sum it up, DeFi applications are built as a fork of Ethereum’s smart contracts that allows users to easily transact and build other decentralized applications.
Japan cryptocurrency’s stance on the market
Japan is one of the leading countries in the world that has accepted using cryptocurrency as a form of payment for goods and services. Needless to say, their cryptocurrency legal system has remained prevalent over the years, creating a buzz in the Asian market. Learn more about the current status of Japan cryptocurrency in other articles on our website.
Cryptomarket: What is it all about?
Feel free to browse through our website and find topics that suit you best. Explore the world of crypto and be knowledgeable on the following topics:
Bitcoin trading is the exchange of coins via cryptocurrency platforms using blockchain technology. It allows you to easily transfer money from your account to another in just one app. A more in-depth explanation will be given in our articles about bitcoin trading. Browse through our website to learn more.
As mentioned earlier, these are the assets that you keep in a crypto wallet and will rise and fall depending on the movement of the market unless it is backed with fiat currencies. Cryptocurrency investments are popular to younger generations nowadays because they can easily input money to their balances and watch it grow overtime. However, when they feel the market is nearing its fluctuation, they will immediately withdraw their balance to not be affected by the crypto drop.
Crypto charts are important in the cryptomarket since it determines which among the cryptocurrencies have the highest market share in the overall market capitalization per year. Currently, Bitcoin still holds the title of being the ‘King of Cryptocurrencies’ since its release in 2009. Competitors such as Ethereum and XRP are also growing and challenging the successful market of the pioneer cryptocurrency.
Crypto price index
Crypto price index varies depending on the current market. It is calculated by the value of crypto exchanges that will be converted to dollars or whatever currency you’d like to have your money in afterwards.
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