The latest in Finance: Blockchain technology and cryptocurrencies
Have you ever heard about cryptocurrencies or blockchain? Do you want to invest some money in crypto, but you don’t know anything about this new world? If so, this article is right for you, we will discuss this new and curious world in simple words.
What are cryptocurrencies?
I’m sure that you heard about Bitcoin at least once, and maybe you even know to give a definition of it, but do you know how do cryptocurrencies work?
First of all, a cryptocurrency is a currency that exists only in digital form and for this reason it is not perceived as the money we use every day, such as dollar banknotes or euro coins, in fact it does not even have a central authority that controls it, as globally recognized currencies have.
The best known is Bitcoin, born in 2008, which has reached in the years the highest value. Subsequently, other cryptocurrencies were also born, called Alternative Coins (Altcoin) and currently there are more than 2000, obviously there are cryptocurrencies that have more value and others that have less.
But if they are not recognized and managed by a central authority, how can someone buy and sell using these currencies?
How payments work
A positive aspect, which however can prejudge the exchange of bitcoins in finances, is cryptography, the system that protects data relating to the possession of cryptocurrencies.
It's a complicated system, but let's try to explain it in simple words: since there is no authority that takes care of it, every person who owns cryptocurrencies is considered his own “bank”, but it is cryptography itself (a mathematical process made up of complex calculations) that protects each "personal bank" from other people.
You don't need to understand the whole process, because there are many apps that you can use to make and receive payments, manage your cryptocurrencies, and make investments.
Coinbase is the most used and reliable app, just sign up on their site, create a wallet (like a kind of personal account) and connect your current account, so you can invest your money in the app and get income in the form of cryptocurrencies; you can download the app to always have your wallet at hand and manage it, the app is very simple and you can understand how it works without even being an expert in cryptocurrencies. If you want to know more, you can visit Coinbase’s official site here: https://www.coinbase.com/it/
How to invest to earn from this new world of finance?...
The functioning of investments
Investment and trading are two different concepts, investment is a long-term process, whereby you invest money and wait for a period of time for that value to grow, in order to make a greater profit.
Trading, on the contrary, is always an investment but for very short periods of time, which depend on the risk and the possible gain. As far as cryptocurrencies are concerned, both processes can be carried out, but this depends on your needs and will: the term trading is usually used for cryptocurrencies, as their value changes every day and investments are made for short periods, in order to be able to immediately draw the profit in those periods in which the cryptocurrency has a greater value.
Trading works like this: cryptocurrencies are bought with real money, the trend in the value of the cryptocurrency being "bought" is followed for a period of time and when you are satisfied with the gain achieved, the cryptocurrency is sold to get both the money back that we initially used to buy the cryptocurrency and the gain made from the increase in its value.
There is no well-defined period of time, but it is preferable to check the performance of the various cryptocurrencies to know which one to invest in. Also, you can invest how much you want, but keep in mind that the more you invest, the greater your profit will be.
If you want to know more, you can consult this website: https://academy.binance.com/it This website offers you well done courses that prepare you, but also detailed articles to better manage your finances, everything available in 32 languages.
Blockchain technology
Blockchain is a set of technologies that manage and control everything related to cryptocurrency transactions, consent, and exchange. This novelty was born following the Bitcoin, in fact they are closely connected, but being in fact a novelty it’s still undergoing continuous progress and improvements, especially as regards legislative recognitions.
The Blockchain is a set of nodes within the network, which takes care of protecting and controlling the possession and exchange of cryptocurrencies and works through algorithms and complex mathematical calculations.
There are two types of Blockchain: the permissionless Blockchain, in which everyone can be a node of this system and therefore can approve the transactions (an example is Bitcoin); while permissioned Blockchains restrict access to only a few authorized people.
This technology was born from the Blockchain.com company, a private company that deals precisely with these services, founded in 2011 by Ben Reeves. You can consult their official website to learn more about their story and you can also download their app: https://www.blockchain.com/
What’s happening to Bitcoin?
In this period Bitcoin is slightly compromised, and its value has dropped below 30,000 dollars. This is because the FED (the Federal Reserve System, the central bank of the United States of America) has increased interest rates, in such a way as to allow a rise in the US dollar; its value is also compromised by the world economic situation, in fact many countries are experiencing economic crisis and inflation.
These factors are decisive for the value of Bitcoin, which in fact depends on market demand, the more people buy Bitcoin and the more its value rises. To know more about it, here is a good article to read: https://www.forbes.com/advisor/investing/cryptocurrency/why-is-bitcoins-price-falling/
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