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Cryptocurrency explained

By MAURICIO RICH

The price drops.

Then it rises.

It plunges again.

Frustration.

That’s the volatility of the cryptocurrency market since they became popular in the past five years. For those who are still unfamiliar with it, let me tell you. It is the future. Cryptocurrencies are virtual coins which can be bought and sold, essentially to make profit, but also to send money with no fee to somebody around the world.

So where do people actually buy these coins? They are exchanges and they have hundreds of different coins, but of course not all of them are reliable.

Think of a virtual store that only sells coins. Once they are purchased, traditional currencies such as dollars or euros become cryptocurrencies. For example, if you purchase five Litecoins at $100, then those five coins are worth the money you invest. If the value of the coin increases, you win. The coins are kept in virtual wallets in the exchange.

Coins have different prices and they can either rise or drop depending on how many people buy or sell a particular coin. If a bank or a big company backs up a coin, people will believe it is a safe coin to invest.

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The technology behind cryptocurrencies is called blockchain, which allows transactions to be instant and anonymous, with just a unique ID or link address, provided by the exchange. You can send 50 ripples to Thailand, for instance, in just seconds. Then, you can take those 50 ripples and send them to Seattle. There is no government or exchange regulation.

Coins can be useful to send money and to make profit. Once coins are received, users can easily convert a coin’s value into traditional currency.

The growth of these coins, in particular Bitcoin, has been hard to ignore. More and more people continue to invest in these projects.

It is difficult to disregard the massive development of cryptocurrencies. I gave it a shot and a made $50 my first time buying Litecoin. As a college student, it is a good way to make some money at school.

Some of the things to consider when investing in coins are the exchange and the project or projection that a coin has. If banks and big corporations believe a coin has potential to increase its value, then users will invest in that coin.

Another important factor to consider is who could potentially mentor you for these investments. One of the most important factors when purchasing or investing in coins, is the creation of a personal portfolio. Such portfolios can contain information about what coins users buy, their prices, real-time simulators and profits calculators. Portfolios are very common and they are available as mobile applications on the App Store and Google Play. Portfolios are a great tool to keep virtual wallets organized and are recommended by most cryptocurrency advisors.

Believe it or not, social media plays a big role in this market and is another key element to consider. News about coins can either help a coin’s price to rise or make prices plummet, just as stocks lose value, depending on the coverage of a particular coin. Moreover, there is a lot of manipulation in this market and it all comes from social media. However, not everything is negative. Social media can also empower coins to be more popular. Ripple is a great example.   

Ripple has a partnership with Santander Bank in Europe to launch a fast-transaction mobile app. Users believe in the potential technology of blockchain and that is why banks are forced to try to partner with coin developers. This story was announced on Instagram and it had an immediate effect. Users simply started buying Ripple, which is one of the safest coins to invest in right now.

Not only can cryptocurrencies be a potential future for banking, but also to purchase products using those virtual coins. There is a high chance that if these coins keep growing, countries may eventually have to adapt regulations or even allow coins’ values to purchase every-day products.

The cryptocurrency market is still relatively new and there is always room for improvement and corrections. On the other hand, its massive growth is not easy to ignore. This is will be part of future. Blockchain technology will be part of the future.

The price rises.

Then it drops.

It increases again –victory.

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Mauricio Rich can be reached at mauricio.rich@theminaretonline.com

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