Want to invest in Cryptocurrency? Know the basics about Bitcoin, Ethereum and Cardano
Have you invested in any cryptocurrency? Ideally, it should be a part of your asset allocation strategy as well as for diversifying risk. However, do not forget that it is one of the riskiest assets to invest in. As can be seen, it is running in huge loses and any entry should be carefully considered and experts should be consulted before doing anything. RBI has so far frowned on anything associated with crypto. So, in case you are planning to invest in any of the cryptocurrencies and are confused about which one you should pick then you can consider this. Before starting, you need to know what a cryptocurrency is.
Cryptocurrency is a digital currency secured by cryptography and can be used as a form of payment. According to the Reserve Bank of India (RBI), the defining characteristics of cryptocurrencies are- they are decentralized systems where transactions are authenticated by participants themselves by consensus. They are anonymous and borderless that is, they work over the internet without any physical existence. That is where all the risk lies. Also Read: Apple AirPods Pro vs Sony WF-1000XM4 vs Sennheiser Momentum TWS 3: After Review, we pick our WINNER
RBI further in the month of February 2022 informed that, until 5 years ago, total market capitalisation of all cryptocurrencies was only USD 20 billion (February 2017). This went up to USD 289 billion in February 2020 and thereafter exploded to reach a peak of USD 2.9 trillion in November 2021. As of February 09, 2022 it stands at USD 1.98 trillion. Bitcoin accounts for 42% of this market capitalisation, the top two cryptocurrencies account for 61% while the top five account for 71%. The total number of cryptocurrencies is at 17,436 and the total number of crypto exchanges is 458. Also Read: Apple WWDC 2022: What gifts will iOS 16 bring for the iPhone 12 and iPhone 12 users?
So for those who are interested in cryptocurrencies, here are the top 3 that have been making news for the right, or wrong, reasons recently.
1. Bitcoin: According to RBI, Bitcoin started more than a decade back in 2008. It is said to be the world's largest and most popular cryptocurrency. Bitcoin reached its all-time high of USD 68,990 per token in November 2021, and has decreased subsequently in the past few months, according to a report by analyticsinsight.net.
2. Ethereum: After Bitcoin, Ethereum is the most popular cryptocurrency and is the second-largest cryptocurrency in the world. In the month of August 2022, developers will be launching Ethereum 2.0. Ethereum 2.0 will transform the proof-of-work protocol into a proof-of-stake protocol.
3. Cardano: Cardano (ADA) is a cryptocurrency which can be seen as a tough competition for Bitcoin and Ethereum. Cardano has increased the number of smart contracts based on its blockchain after updating its network in late 2021. It has also released other features like token creation.