Introduction To The Cryptocurrency Market

This goes without saying; the world has become more and more digital. This technical evolution birthed a new and pretty popular financial market: Cryptocurrency.

In its most basic form, cryptocurrency (or crypto) is digital money that relies on cryptography to maintain security and fidelity. It's decentralized, so these are neither governed nor issued by central banks or government. 
In this lesson, you'll explore the crypto world and its potential to grow your capital.

 

Lesson Highlights:

•    Cryptocurrency is a digital currency programmed using cryptography to ensure the currency's security and fidelity. 
•    The history of cryptocurrency conceptualization dates to the 1900s with eCash when Chaum tried to create a digital token using his Blinding Formula.
•    Bitcoin Pizza Day is celebrated every 22nd of May to commemorate the first recorded real-world Cryptocurrency transaction where Laszlo Hanyecz bought Papa John's pizza using his 10,000 BTC. 
•    Crypto trading involves buying and selling a trading pair, whether that be a Fiat-to-Crypto (BTC/USD) or (BTC/ETH)
 

What is Cryptography in Cryptocurrency?

Cryptocurrency is a digital currency, which means that it doesn't have any physical form. They are far different from the common currencies, like paper and coins.

These digital currencies rely mainly on cryptography for maintaining the currency's integrity. Essentially, these are programmed as a code line allowing all cryptocurrency users to access crypto transactions using their own device and ledger.

These transparencies assure crypto users that the market is free from fraudulent activities. Any attempt to alter transaction records would require hacking the rest of ledgers in the network.

 

History of Cryptocurrency

If you're interested in the financial niche, you've probably seen the craze over cryptocurrency over the past years. But how did it start?

If you think that cryptocurrency only starts with the emergence of Bitcoin, your answer is 50% correct and 50% wrong.

You see, the cryptocurrency craze started with the introduction of Bitcoin, but its conceptualization dates back to the 80's. The core knowledge for cryptography is Chaum's Blinding Formula. This formula has made securely sending and receiving digitalized tokens possible – all without the control of central authorities.

Chaum first used the Blinding Formula through DigiCash's eCash. This is the first digital currency materialized; however, the operation was not pushed through due to budget limitations. 

Still, its introduction to the blockchain space has spurred interested minds, which led to the creation of secured digital tokens that mimic gold's value stability.




 

The Humble Beginning of Bitcoin

The unidentified entity hiding under the name Satoshi Nakamoto is (or was) the one that introduced Bitcoin (BTC) to the financial market. In 2008, a famous whitepaper called Bitcoin: A Peer-to-Peer Electronic Cash System was published under the name of Nakamoto.

It proposed the scarce supply of around 21 million BTC—a digital gold-influenced token. However, Nakamoto's proposal for BTC has not garnered enough publicity. A single Bitcoin is traded at around $1 for almost two years (2009~2010).

But it started to experience its first significant "price pump" when Forbes mentioned BTC in its cryptocurrency article. With Forbes publicity, the BTC value rose to $9 per BTC.

Now, a single BTC is being traded at around $31,000 (low) to $68,790 (high). 

 

Overview of Cryptocurrency Trading

Like any financial market trading, crypto trading involves buying and selling cryptocurrency. This includes trading pairs like Fiat-Crypto and Crypto-Crypto trading. Essentially;

1. Fiat-to-crypto trading involves trading a fiat currency (USD, EUR, GBP) against cryptocurrency (BTC, ETH, USDC)
2. Crypto-to-crypto trading involves the practice of trading cryptocurrencies against one another.

As mentioned, one notable feature of the crypto market is its decentralized nature. Unlike stocks, the crypto market is free from any central controls of authority. It mainly relies on blockchain technology and ledgers to record crypto transactions.

Also, its decentralized nature provides limitless profitable opportunities to crypto traders. Due to its nature, the crypto market operates 24/7, making it accessible to traders wanting to profit from the market.

Among the most common cryptocurrencies for traders are:

• Bitcoin (BTC)
• Ethereum (ETH)
• USD Coin (USDC)
• Binance Coin (BNB)

 

Understanding Blockchain Technology

One early criticism that cryptocurrency faced was its susceptibility to fraudulent acts. However, the concern was resolved with the introduction of blockchain technology. 
Cryptocurrency transactions are recorded in a network called the blockchain. This provides transparency on the decentralized nature of crypto trading.

All transactions recorded on the blockchain are visible to all network participants. This recordkeeping promotes market transparency and accountability.

Once recorded, deletion and alteration of a transaction is physically impossible because one must delete or alter the transaction across all ledger network.

Essentially, blockchain upholds the integrity of cryptocurrency. It makes transactions immutable and secure from counterfeiting, tampering, and fraudulent activities.