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All about cryptocurrency and crypto investing

They are given several names: crypto-assets, crypto currencies, virtual currencies, digital currencies, etc. Popularized thanks to Bitcoin, cryptocurrencies now number in the thousands. How do they work? What is their use? Which ones should you follow closely? We explain everything there is to know about crypto-currencies.

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Mis à jour le 11/26/2023 à 21:23

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What is a cryptocurrency ?

Cryptocurrencies are virtual currencies. These are actually sets of algorithms in the form of encrypted data stored in a blockchain.

They only exist virtually and have no physical support (coin or note). They can be stored on totally virtual wallets or on digital wallets contained in a physical medium (such as an external hard drive).

Bitcoin and all other cryptocurrencies (Altcoins) have their own characteristics and uses. Some also have their own blockchain while others use existing blockchains.

They can be traded like regular currency.

How do cryptocurrencies work ?

Cryptocurrencies respond to a logic of decentralization.

No state, central bank or financial institution regulates them or verifies transactions. They operate on the basis of a Peer-to-Peer system. They are transferred from one owner to another by a cryptographic process and thanks to blockchain technology.

Cryptography is a principle of encrypting information derived from mathematical concepts and which is used in particular in the field of computing to protect

Example of a transaction: An individual A wants to send cryptos to an individual B. He orders the sending of his wallet to that of B.

Before the transaction is made, it is broadcast on the network of the relevant cryptocurrency. Some network participants called “nodes” will check this transaction to make sure it is legitimate. Then, the transaction will integrate a representative block which must itself be verified before being added to the blockchain. This mode of operation guarantees the transparency, security and reliability of transactions.

What is the use of a cryptocurrency ?

For the moment, the usefulness of a cryptocurrency as a financial tool is quite marginal Even if Bitcoin can in some cases be used to pay for purchases of goods and services, crypto-assets mostly stick to to investment.

There are many forms of investing in cryptocurrency including saving, staking, lending, farming. Techniques that allow crypto holders to grow their money by earning interest.

Beyond investments, it is also possible to trade cryptocurrencies via platforms such as eToro to bet on the movements of the price of cryptos with interesting leverage effects.

In addition to the financial aspect, cryptos bring an impressive field of digital possibility with the web3. Blockchain technology is used to freeze virtual worlds.

Today, a real virtual world is taking shape thanks to blockchains and cryptocurrencies are their operating tools.

Cryptocurrency has enabled the development of :

  • NFT (and therefore digital intellectual property)
  • Metaverses
  • Smarts contracts which are smart contracts written with automatic terms that execute if conditions are met

What are the main cryptocurrencies ?

Some cryptocurrencies have the merit of dominating the market by the stability of the project that supports them, by their innovation and by their usefulness.

Here are the top 10 cryptocurrencies by market capitalization (excluding stablecoins) in 2022 :

  1. Bitcoin (BTC) : 608 billion
  2. Ethereum (ETH) : 282 billion
  3. Binance Coin (BNB) : 53 billion
  4. Ripple (XRP) : 25 billion
  5. Solana (SOL) : 23 billion
  6. Cardano (ADA) : 22 billion
  7. Terra (LUNA) : 20 billion
  8. Dogecoin (DOGE) : 15 billion
  9. Avalanche (AVAX) : 12 billion
  10. Polkadot (DOT) : 11 billion

Market capitalization is the total value of a cryptocurrency. That is to say the multiplication of the number of tokens in circulation by their value.

Example: 19,000,000 bitcoins are in circulation and it costs 32,000 euros -> 19,000,000*32,000 = 608,000,000,000.

What are the cryptocurrencies with high potential in 2022 ?

If you intend to invest in cryptos to grow your money, you have to know how to go about it.

First of all, you have to be aware of the risks. Even if cryptos appear to many to be the future, it is a market which is still very volatile and which absolutely does not guarantee its growth.

If you want to invest in cryptos, you have several investment choices. You can invest in the short term by trading cryptos and betting on their price movements.

You can also bet on the medium/long term and buy cryptos while waiting/hoping that their price will rise in the coming months.

Here are the cryptos to watch closely in 2022 :

Ethereum (ETH)

Ethereum (ETH) is very promising. Indeed, with the massive wave created by the NFT revolution and that of metaverse projects, crypto is under the spotlight. According to many experts, it could explode this year.

Ethereum is the blockchain that brought the innovations of smart contracts and many other projects are now based on this technology. The project is currently developing ETH 2.0 which is a token that will solve the current disadvantages of ETH. Case to follow !

Cardano (ADA)

Cardano is one of the hottest crypto right now. In 2021, its value has almost multiplied by 11. Currently, it is among the Top 10 cryptocurrencies in terms of market capitalization.

However, the companies behind its creation are heavily involved in cryptography, blockchain technology and engineering. In the short and medium term, this token is worth keeping an eye on in 2022.

Solana (SOL)

You may never have heard of Solana (SOL). Yet the Solana platform has caused a kind of revolution in blockchain technology. It offers fast, secure and highly scalable DeFi applications and decentralized marketplaces.

In September 2021, the network was already processing 2,000 transactions per second compared to 3 transactions per second for BTC and 15 for ETH. In addition, the average transaction cost is $0.000025 for SOL compared to $3 for BTC and $15 for ETH.

By November 2021, the network had totaled 1.5 billion transactions compared to 39 million for Ethereum.

For 2022, investors have not been asked. If you have a large budget, you may be able to try your luck with this crypto, just to diversify.

Other high-potential cryptocurrencies in 2022

Here are other cryptos to watch in 2022 :

  • Litecoin (LTC)
  • Avalanche (AVAX)
  • Stellar (XLM)
  • Binance Coin (BNB)
  • Decentraland (MANA)
  • Polygon (MATIC)
  • Polkadot (DOT)
  • Fantom (FTM)

What are the platforms to invest in a cryptocurrency ?

If you decide to invest in cryptocurrencies, you need to find a platform to buy them. There are two types of platforms :

  1. Exchanges
  2. Brokers

Exchanges are crypto trading platforms. You can buy tokens there and trade them.

Brokers are online brokers that allow users to trade cryptos just like fiat currencies or gold.

Here are the main trusted platforms for investing in cryptocurrency :

  • eToro : the best known broker for traders
  • Binance : one of the most popular exchanges, with the lowest trading fees on the market
  • Bybit : a new exchange that offers a wide range of features
  • Bitget : the crypto exchange that perfectly combines trading and cryptocurrencies
  • Kraken : highly regarded for its seniority, safety and customer service
  • Bitpanda : which offers a relatively wide range
  • Coinbase : one of the leaders in the crypto-sphere

⚠️ This article is published for informational purposes and should not be considered as investment advice. Crypto-currency trading involves risk and it is important not to invest more than you can afford to lose.

InvestX is not responsible for the quality of the products or services presented on this page and shall not be held liable, directly or indirectly, for any damage or loss caused as a result of using any goods or services highlighted in this article. Investments related to crypto-assets are risky by nature, readers should do their own research before taking any action and only invest within the limits of their financial capabilities. This article does not constitute investment advice.

Thomas

Thomas

Web editor for many years and SEO specialist, Thomas became an editor for InvestX when the site was launched. Passionate about the field of crypto and Web3, Thomas has made it his mission to deliver maximum value and introduce readers to the world of blockchains, considered for him as the world of tomorrow.

Risk Warning: Trading financial instruments and/or crypto-currencies involves high risks, including the risk of losing all or part of your investment, and may not be suitable for all investors. Crypto-currency prices are extremely volatile and can be affected by external factors such as financial, regulatory or political events. Trading on margin increases financial risk.

 

Before deciding to trade in financial instruments or crypto-currencies, you should be fully informed of the risks and fees associated with trading in the financial markets, carefully consider your investment objectives, level of experience, and tolerance for risk, and seek professional advice if necessary.