Everything you should know about cryptocurrency in 2022

What Is Cryptocurrency?

 

• Cryptocurrency takes the form of digital assets.
• Buyers use the money to buy assets (or a part of an asset).
• Buyers then exchange the assets online for goods or services.

Cryptocurrency

How Does It Work?

• Transactions are verified using Blockchain.

• Blockchain transactions are decentralized, meaning they're spread across many computers to manage and record transactions.

• Because Blockchain transactions rely on many computers, they are considered more secure than centralized currencies.

 

How cryptocurrency works

What Gives Cryptocurrency Value?

Like any non-fungible token (NFT), cryptocurrency gets its value based on what people are willing to pay for it.

• It's similar to fine art or real estate. The value of a cryptocurrency will go up or down based on how much demand there is for it.

• Housing prices across the U.S. fell by an average of 33% during the 2008 recession. By 2018, they had rebounded and increased by more than 50%.

• Monet died poor even though he had lots of paintings to sell, but now the average price of one of his paintings is about 7 million USD.

• The price of dogecoin, a cryptocurrency, dropped by 35% after Elon Musk called it a hustle.

Digital Currency vs. Cryptocurrency

For example

Housing prices across the US fell by an average of 33% during the 2008 recession. By 2018, they had rebounded and increased by more than 50%. Monet died poor even though he had lots of paintings to sell, but now the average price of one of his paintings to sell, but now the average price of one of his paintings is about 7 million USD.

The price of dogecoin, a cryptocurrency, dropped by 35% after Elon Musk called it a hustle.

What Are the Different Types of Crypto?

 

Different types of crypto generally fall into one of two categories:

 

• Coins, which can include Bitcoin and altcoins (non-Bitcoin cryptocurrencies).

• Tokens, which are programmable assets that live within the blockchain of a given platform.

 

Though many people use the words crypto, coins, and tokens interchangeably, it’s important to understand how they differ from one another in order to gain a basic understanding of cryptocurrency.

Types of Cryptocurrency

The 10 Most Common Types of Cryptocurrency

1. Bitcoin

2. Ethereum

3. Cardano (ADA)

4. Binance Coin (BNB)

5. Tether

6. Solana

7. XRP

8. Dogecoin

9. Polkadot (DOT)

10. USD (USDC)

 

What Is Bitcoin Mining?

 

Bitcoin mining is the process by which new bitcoins are entered into circulation; it is also the way that new transactions are confirmed by the network and a critical component of the maintenance and development of the blockchain ledger. "Mining" is performed using sophisticated hardware that solves an extremely complex computational math problem. The first computer to find the solution to the problem is awarded the next block of bitcoins and the process begins again.

Cryptocurrency mining is painstaking, costly, and only sporadically rewarding. Nonetheless, mining has a magnetic appeal for many investors interested in cryptocurrency because of the fact that miners are rewarded for their work with crypto tokens. This may be because entrepreneurial types see mining as pennies from heaven, like California gold prospectors in 1849. And if you are technologically inclined, why not do it?

However, before you invest the time and equipment, read this explainer to see whether mining is really for you. We will focus primarily on Bitcoin (throughout, we'll use "Bitcoin" when referring to the network or the cryptocurrency as a concept, and "bitcoin" when we're referring to a number of individual tokens).

 

Why consider investing in cryptocurrency

 

1. It could potentially become mainstream someday

 

Cryptocurrency has the potential to become life-changing. It could become a mainstream form of payment someday, it could provide a way to hedge against inflation, and blockchain technology -- the foundation behind cryptocurrency -- could also have an enormous impact on how we do business.

If crypto does become mainstream, its price could soar to new heights. Bitcoin is currently priced at close to $44,000 per token, but some experts predict it may reach up to $500,000 per token someday. Depending on just how widely adopted cryptocurrency becomes, there could be a lot of earning potential for early investors.

Of course, nobody knows for sure whether it actually will become mainstream. But if you're the early adopter type and believe cryptocurrency has a shot at changing society as we know it, now may be the time to buy.

 

2. You'd rather risk losing money than live with "what if"s

 

Even if you're a cryptocurrency skeptic, there's one other reason to consider investing: You don't want to live with the regret of not buying if it becomes mainstream.

If you're undecided about whether to invest, picture two different scenarios. First, think about how you'd feel if you bought cryptocurrency now, but it ended up failing and you lost every dollar you invested. Second, consider how you'd feel if you opted not to invest, but it became a massive success and you missed out on those earnings.

For some people, losing money is the worst-case scenario. That's fine, and it means crypto probably isn't the right investment for you. But if you'd rather risk losing money so you don't have to live with the "what if"s down the road, you might consider investing.