A lot of persons must have heard the word cryptocurrencies but only few would actually know what it means and all that it entails. Up till January 2022, only less than 5% of the world’s population hold crypto. It is evident that the crypto market is still very early and still has a long way to go. In this article, I’ll be highlighting everything a newbie needs to know about cryptocurrencies and why I think it is the future of everything money.
WHAT ARE CRYPTOCURRENCIES?
Cryptocurrencies are tradable digital assets or digital forms of money on the blockchain and only exists online. They do not exist in physical form and are typically not issued by a central authority. The first recorded Cryptocurrency is Bitcoin which was released by a man known as Satoshi Nakamoto in 2009. Since then Bitcoin has recorded very huge successes of which being adopted as a legal tender in El-Salvador is one of them. Since the release of bitcoin, several other cryptocurrencies have being released such as Ethereum, BNB, Doge, Solana and many others. Each striving to solve problems in different sectors.
Basically, cryptocurrencies can be seen as tradable digital assets that strive to solve problems in different areas of life. A major characteristic of cryptocurrencies is that they are decentralized and transactions cannot be tampered with.
TYPES OF CRYPTOCURRENCIES
Broadly, cryptocurrencies can be divided into two notable types which are Bitcoin and altcoins. Bitcoin is self explanatory as it is the first ever cryptocurrency. With a market cap of about $817B at the time of writing this article, Bitcoin stands as the number one cryptocurrency in the world by market cap.
Altcoins or ‘alternative coins’ can be seen as any coin released after bitcoin. These coins are known as alternative coins because they follow the bitcoin model and are all created as bitcoin derivatives. Some notable examples of altcoins are Ethereum, BNB, Solana, Doge coin, Shiba Inu and Fantom. Each of these altcoins have carved out a niche for themselves and have managed to grow of community of loyal followers.
TOP FIVE CRYPTOCURRENCIES AND THEIR USE CASES
The top five cryptocurrencies as seen on coinmarketcap and their uses cases are shown below.
- BITCOIN: Bitcoin is the first ever cryptocurrency and all other cryptos follow the steps of bitcoin. It has been noted that the price of bitcoin directly or indirectly affects the price of other cryptocurrencies. Bitcoin can primarily be used as a currency for cross border payments and it can also be used as a store of value.
- ETHEREUM: Ethereum is the second biggest cryptocurrency by market cap and it has seen a huge level of success over the years. Ethereum is a permissionless blockchain which serves for the creation and development of decentralized applications (dApps). It’s major downside is the high gas fee which is being tackled by other blockchains.
- BNB: BNB is the native coin of the Binance exchange. Binance being the leading exchange in the world initially launched BNB as a way for customers using the Binance exchange to pay reduced transaction fees. The use cases of BNB has since been multiplied and can now be used as collateral for crypto loans, payment for utility and so many others.
- TETHER (USDT): Tether is the fourth biggest cryptocurrency by market cap. It is a stable coin and is not affected by the market volatility. Tether is useful for crypto investors because it offers a way to avoid the market volatility associated with other cryptocurrencies. It can also be used as payment for products and services since it is pegged to the US dollar.
- SOLANA: Solana is ranked the fifth biggest cryptocurrency according to coinmarketcap. $SOL which is the native token of the Solana ecosystem is used to pay for transactions across the ecosystem. It is characterized by a very low gas fee as opposed to the Ethereum gas fee. Solana is a better option compared to Ethereum in terms of transaction fees.
HOW TO GET STARTED
Investing in cryptocurrencies is quite easy since we’re in a digital age. Everything can virtually be done from the comfort of your home. To get started, you can simply sign up on Binance or Kucoin if you want to trade your crypto assets actively. For large assets or for assets you want to HODL for a long period of time, I would recommend decentralized wallets like trust wallet, metamask and the likes of them. A tutorial will be released in the near future on how to use different exchanges and decentralized wallets.
You can check out my interesting crypto journey here.
Getting invloved in the crypto space at this point is really worth it as we’ve seen what has happened in the crypto space in recent times. Cryptocurrencies have been changing lives and it will continue to do so. Less than 5% of the world hold crypto and we can only imagine what will happen when 70% of the world adopt it. Cryptocurrencies have come to stay and it will change our lives for the better.