Cryptocurrency knowledge for new investors
In recent years, too many types of Cryptocurrency have been born with too many investing invitations into it. Many people became rich in a very short time by investing into Cryptocurrency, while others were victims of frauds created by professional organizations due to lack of knowledge.
Ambitious dreams of building wealth from Cryptocurrency also come with hesitations and strong refusals.
Those who have no knowledge, no experience about Cryptocurrency are really confused because of information disturbance. They do not understand what Cryptocurrency really is, so they worry about frauds and feel very confused about choosing an appropriate coin to invest into.
There are lots of questionable problems around this digital currency, therefore, people who invested still always panic and wonder whether their decisions are right or wrong, whether their capital will be lost.
Be careful with “Garbage coins”
After the success of Bitcoin, hundreds of types of Cryptocurrencies known have as Altcoin have been born. Altcoins appear to improve Bitcoin’s weenesses and some Altcoins are making efforts to overcome Bitcoin.
Lacking of information and knowledge about Altcoins results in wrongly investing into “garbage coins” which causes big economic damages.
A real currency needs to conclude 03 elements: a real algorithm, a cold storage wallet and an mining server system.
If products in general and Altcoins in particular do not have their applicability in the real life, they will soon be dismissed (garbage coins).
Some typical Altcoins
Some basic notices about real Cryptocurrency
The first condition should be asked about Cryptocurrency is that which algorithm this currency used, is it strong enough or not. Cryptocurrency is created by data mining method. Data mining is the progress servers use algorithms to encrypt, decrypt, analyze, explore the date blocks and are paid by Cryptocurrency.
Some common algorithms used to encrypt Cryptocurrency are: SHA – 256 algorithm with Namecoin, Bytecoin, Devcoin,…like Bitcoin; Scrypt algorithm with Litecoin, Novacoin, Bitmart…etc.
Many coins in the market just have tokens, not real algorithms. The capital is generated by providers in the system, that money is used for domestic transactions in the company or in the same exchange.
This money cannot go on the free exchanges. It brings investors many risks of losing money anytime.
Mining server system
The creation of normal virtual currency is simply don’t by the system. The time and quantity is not limited, and depend on subjective decisions of the holding company.
Cryptocurrency is completely different from other normal ones, the creation of money is done by server system. It makes money by mining data in data blocks. The money created is limited by the algorithm. If only the algorithm is changed can the mining quantity change. It will only carried out when most of servers mining money agree to update new algorithm .
Therefore, when investing into Cryptocurrency, you need to find out if there are many individuals, organizations participating in “mining”. The more servers are “mining” the currency, the better it is, the more secure it is.
Bitcoin mining system of Genesis company
When we talk about money, we often think of wallets. This is also true with Cryptocurrency. Good currencies need to have their wallets. People with wallet addresses can easily transfer money with each other without any intermediate.
In strong high tech currencies, online wallets are able to freeze accounts. When your wallet is installed in your computer or mobile, you disconnect from internet, your money will be safe in your wallet.
The money in your wallet will never be used or appear in the market if your computer/ phone is not connected to the internet.
Cryptocurrency is a product of technology. So if it is only used to pay for commodities, services…it will soon be altered by other currency. Unless this currency is protected by the government and is used to be official currency in a country or in a economic block.
Essentially, a digital currency only exists when it has high applicabilities, it is used in many different fields such as: Banking, data storage, transportation, Data transmission and processing. …
Transacted on free exchanges
In order to bring digital coins to free exchanges, at first the holding company need to applies form and guarantee fee to exchanges. These exchanges will have a deciding vote. Besides, some key elements also needed such as: this currency has real algorithm, real wallets, many individuals, companies, organizations participate in mining coins, big community,…
The exchange Bitfinex.com
Cryptocurrency is the trend of technology as well as online commercials. Lots of companies, groups are creating their own currency to get into the trend. Therefore, in recent years, more and more new Cryptocurrencies have been born.
Although Cryptocurrencies were created by big groups and they are the trend of future, they are not always able to be on free exchanges. Many people only choose the currency that was transacted in free exchanges to invest into.
Some free exchanges investors often use are: c-cex.com, bitter.com, Coinmarketcap.com, BTC-E.com, Bitfinex.com…
High liquidity is one of the most important elements creating the value of a digital currency. When investing, you should choose Cryptocurrencies with high liquidity, which are easy to transfer to other digital currencies or currencies issued by countries, easy to use in online commercials, online payments, or commodity purchases,…
Many currencies have good domestic liquidity but poor liquidity on free exchanges or have not been on free exchanges. However, the liquidity on domestic exchanges is of great importance.
The time of payment for customers is exact, matches with purchase-order time on exchanges. The liquidity and accuracy elements are very important when investing into Cryptocurrency.
One of the features of currency is many people accepting. In cryptocurrency, the more people from different countries, more companies, groups, websites,…accept that coin as a exchanging currency, the better it is.
In 2012, the Microsoft accepted payment in Bitcoin.
In those who accept Cryptocurrency as a currency, you might want to know about some groups, companies, online commercial websites accepting this currency in its commodity payment activities. Some leading groups of this trend is :Microsoft, Paypal, Amazon, Dell…
There are 2 factors determining whether you should invest or not: payback time and profit. The currencies with short payback time will attract more investors. Some accept the time of 3 months, 6 months, 1 year or longer, depending on personal thought and strategies.
Even some very promising cryptocurrencies will be affected by many factors in the future. Perhaps in 2 – 3 years, the value will increase hundreds of times, or maybe in 1 – 2 years, its value will not rise. Therefore, choosing currencies with the short payback time will be safer for investors.
Holding company with good reputation
Some people choose the type of currency in a very simple way. They completely base on the reputation of the holding company. They do not care or know nothing about other factors. Such companies are Microsoft, Dell…
Good business strategy
Cryptocurrency is like money issued by government. The stronger the country’s economy is, the higher the value, security and stability of this currency is. It is also true with Cryptocurrency, the holding companies with good business strategies will make its currency’s value increase.
Some companies have strong actions to popularize its currency such as: signing cooperation with banks, opening online banks, linking payment points accepting payment in Cryptocurrency, cooperating with big groups to bring it into payment flow.
Using Cryptocurrency in transaction, payment, investment is becoming common. With amazing benefits, Cryptocurrency is affirming its position and role in the market. Understand Cryptocurrency, smartly invest, become an investor knowing what you are investing into. Good luck!