In the last decade, cryptocurrencies have become a central topic in discussions about the future of global finances. Terms such as Bitcoin, Ethereum and Blockchain are now part of everyday vocabulary, but what really does mean? Read this article and find out all about cryptocurrencies, what cryptocurrencies, cryptocurrency prices and how to invest in high volatility conditions.
What are cryptocurrencies?
Cryptocurrencies are digital currencies that use cryptography to secure transactions and control new units. Unlike traditional money, they are not issued by a central authority, such as a bank or government, but operate on a decentralized network called blockchain.
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Blockchain technology and its role
The blockchain can be compared to a digital register that stores all transactions. It consists of blocks containing transaction sets, each block being related to the previous block.
The difference between cryptocurrencies and traditional money
The traditional money (dollar, the pound, leu) are regulated by central authorities according to the needs of the economy at a given time. The cryptocurrencies, on the other hand, are autonomous and work decentralized, based on the consensus of the users of the network. The transactions are fast, the transfer costs are reduced, and the access is global, meaning anyone has an internet connection can buy cryptocurrency.
Examples of popular cryptocurrencies
Bitcoin (BTC): The first blockchain network ever created. Bitcoin is the first digital currency issued and at present is one of the most popular cryptocurrency, considered "digital gold".
Ethereum (ETH): Platform created in order to allow the development of decentralized applications and intelligent contracts
Litecoin (LTC), Ripple (XRP), Cardano (ADA), solar (soil): other important cryptocurrencies, each having unique features and functions.
Cryptocurrency history
The appearance of the first digital currency in the world, Bitcoin
In 2008 Satoshi Nakamoto published a technical document (Whitepaper) describing Bitcoin, a decentralized digital currency. In 2009, the first version of Bitcoin was launched and thus opened a new era, that of digital currencies and decentralized transfers.
The evolution of the cryptocurrency market
After the success of Bitcoin and Blockchain technology, thousands of other cryptocurrencies appeared, with different functions and features. They have introduced technological innovations such as smart contracts (Ethereum) and higher trading speeds (Litecoin, Ripple).
Important events in the development of cryptocurrencies
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2013: Bitcoin reaches $ 1,000 for the first time.
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2017: Bitcoin exceeds $ 20,000.
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2020-2021: Increased institutional interest and large -scale cryptocurrency adoption. More and more big companies begin to accept payments in Bitcoin.
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2022: FTX platform collapses, one of the largest cryptocurrency exchanges. This event has generated a serious crisis of confidence in the market and has drawn an alarm signal on the need to implement global regulations.
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2023: An accelerated growth of the Defi ecosystem (decentralized finance) and NFT occurs.
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2024: The year 2024 brings with it the adoption of clear regulations in the US and the EU on cryptocurrencies. Thus, a stable legal framework is created encourages institutional investments and cryptocurrency prices begin to increase.
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2025: The integration of cryptocurrencies in traditional financial systems takes place, a number of banks begin to provide crypto services. The launch of digital currencies issued by central banks (CBDC) takes place in several countries.
If you are passionate about digital investments, it is important to know everything about cryptocurrencies and the factors that influence their value.
Cryptocurrency prices and influence factors
Here are four factors that play a crucial role when it comes to cryptocurrency prices: demand and supply, institutional adoption, technological progress and market feeling.
The role of demand and offer
Like any other traded asset on the market, cryptocurrency prices are influenced by the ratio between demand and supply.
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Limited offer: Most cryptocurrencies have a fixed number of units that can be created. For example, Bitcoin has a maximum offer of 21 million coins. This limitation creates a feeling of rarity and can accelerate the price increase when demand is high.
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Increased demand: As more and more investors, companies and governments recognize the potential of cryptocurrencies, demand increases.
Institutional adoption
In the matter of cryptocurrency prices, another decisive factor is the institutional adoption.
Examples of adoption: More and more companies accept payments with Bitcoin or Ethereum. Financial giants such as PayPal and Mastercard have integrated transactions with cryptocurrencies on their platforms.
The impact on the price: when these large organizations enter the cryptocurrency market, the value of digital assets can increase significantly.
Technological progress
The cryptocurrency sector is closely linked to technological innovations. These can influence both the interest of the investors and the price of the coins.
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Launch of updates to Blockchain technology: Technological upgrades, such as Ethereum's Blockchain Migration from the proof-office to the proof-Stake , increase the interest for cryptocurrencies.
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Progress in transaction security: The improvements made in ensuring the security of the transactions contribute to increasing the confidence of investors.
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Development of real applications: cryptocurrencies also gain value through cases of practical use. For example, the use of blockchain in industry through smart contracts or NFTs (Non-Fungible Tokens) creates new markets.
The feeling of the market
The last, but not the latter, the feeling of the market plays an essential role in determining the prices of cryptocurrencies. Investors are often influenced by news, events and trends and most beginner investors seek to discover everything about cryptocurrencies before making the first purchase, so as not to make mistakes.
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Social media enthusiasm: Platforms such as Twitter and Reddit are places where discussions about certain cryptocurrencies can create waves of interest. A notorious example is Dogecoin, supported intensely on social media channels by Elon Musk.
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Fear and uncertainty: Negative events, such as attacks on the exchange platforms, strict regulations imposed by governments or collapses of other digital assets, can cause panic and affect prices.
All about cryptocurrencies: How to invest in high volatility conditions
Investment in cryptocurrencies is an attractive opportunity for many investors. However, the extreme volatility of the cryptocurrency market can be a serious impediment, especially for those who take the first steps in this area. How can you invest smart in cryptocurrencies, making sure you protect your capital?
What does the volatility of the cryptocurrency market mean
Volatility refers to the rapid and significant fluctuations of prices in a particular market. In the case of cryptocurrencies, they may be extreme because the price of an asset can increase or decrease by tens of percent in a single day.
Why is this happening, what are the factors that cause such sudden price changes?
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Lack of clear regulations: Unlike traditional markets, cryptocurrencies are still in an early regulatory phase.
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High / low trading volume: cryptocurrency markets can be influenced by the volume of transactions that take place at a given time.
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Speculation: both enthusiasm and investor panic contribute to price fluctuations.
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Global news and events: Each political declaration or decision can have a significant impact on the market.
Benefits and risks of investment in cryptocurrency
Benefits:
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2. Easy access to the cryptocurrency market: Anyone with Internet access can buy cryptocurrencies.
3. Decentralization transactions Financial transactions are carried out without banks or other financial institutions.
Risks:
1. Financial losses: Volatility can generate massive losses of money in a short time.
2. Lack of regulatory safety: The market remains a relatively uncertain ground.
3. Fraud and Hacking: Without appropriate security measures, your assets can be exposed to risks.
Tip: Before investing large amounts, it would be good to document yourself and understand everything about cryptocurrencies.
6 steps to invest smart in cryptocurrency
1. Before investing, understands the cryptocurrency market
Read about what Blockchain means, what differentiates Bitcoin from others and what projects are the most promising.
2. Diversify the portfolio
Do not invest the capital in a single currency. Diversification minimizes risks.
3. Use a secure platform
Choose a trusted platform for transactions. For example, safe and intuitive applications such as Abarai, where you do not need identity card or KYC documents for small transactions, within the limit of 5000 RON.
4. Sets a firm budget
Invest only the amount you can afford to lose. Volatility can lead to losses, so financial planning is extremely important.
6. Be permanent to be aware of the news
The news has a direct impact on the cryptocurrency market. Subscribe to alerts from reliable sources and avoid rumor-based decisions.
How to manage volatility
1. Do not invest emotionally: the decisions guided by fear or exaggerated enthusiasm are the enemies of the successful investor.
2. Constantly review the portfolio: depending on performance and financial objectives.
3. Be realistic with expectations: 300% increases in the past are not always repeatable.
4. Invest in the long term: Volatility can be overcome by those who are patient.
Cryptocurrencies as a means of protection against inflation
What is inflation and why is it important to protect ourselves?
Inflation represents the general increase in prices over time, which causes the decrease of the power to buy money. In simple terms, with the same amount of money, you can buy less goods and services than before. This phenomenon affects global economies, and investors are constantly looking for solutions to protect their capital. Traditionally, gold, real estate and government obligations have been considered "protection tools" against inflation. However, in recent years, cryptocurrencies have also entered this landscape.
The current global economic context and the challenges of traditional investments
In a world in which geopolitical conflicts, economic seizures and central banks are caused constant disturbances, the value of Fiat often suffers from instability.
Low or negative interest rates, excessive money printing and increasing life costs lead investors to look for more efficient alternatives. In this context, traditional investments can be affected as follows:
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Real estate - although they are considered stable, they come with high maintenance costs and taxes.
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Gold - is a classic asset against inflation, but has an expensive purchase or storage process.
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Government obligations - due to low yields, during periods with high inflation the government obligations are not interested in investors.
Why can cryptocurrencies protect you against inflation?
1. Lack of centralized control
Unlike Fiat coins, cryptocurrencies are not controlled by any central bank. Their offer is generally limited (as is the case of Bitcoin), which means they cannot be "printed" to meet the market requirements. This eliminates the risk of devaluation caused by inflationary measures.
2. Cryptocurrencies have their own price dynamic
This dynamic is not directly influenced by the turbulence of the traditional market, which can make them attractive during periods of economic uncertainty.
3. Transparency and flexibility
Blockchain networks provide complete transactions transparency. In addition, cryptocurrencies can be purchased, stored or sold quickly and without intermediation - perfect for investors looking for accessible options. Unlike real estate or gold properties, cryptocurrencies can therefore be traded rapidly, at any time, without intermediaries.
4. Global accessibility
Cryptocurrencies are accessible from anywhere, eliminating geographical barriers or limitations imposed by traditional financial systems. Anyone with an internet connection can invest, which is essential in a globalized economy.
5. Emerging technology
Cryptocurrencies like Ethereum are not just coins; Their ecosystem allows participation in Defi projects, NFTs and other emerging technologies.
Conclusion
If you are passionate about digital investments, it is important to know everything about cryptocurrencies and the factors that influence their value, so we invite you to read our article entitled: "Cryptocurrency evolution: from Bitcoin to Defi, NFT and Metarers."
