Crypto 101: Coins

See a bitcoin pick it up, all day long you'll... be constantly refreshing the market tracker on your phone.

Everyone has heard of Bitcoin- It's the world's most famous Cryptocurrency.

But it's not the only coin available, there are many coins out there from Elon Musks' favourite, DogeCoin, to the ridiculously named Cumrocket.

And up until last year, the markets for the majority of these coins just kept going up in value. Last year, and the start of this year, have been a struggle for Cryptocurrencies. With economic uncertainty, pandemics and crypto mining being banned in several countries, many investors saw them as too much of a risk and dumped their holdings- causing a crash.

But this isn't the end for crypto. Like the stock market or traditional currencies, there will be dips and it's not a reason to disregard them.

So I'm going to build on the first newsletter around Crypto I did (link below) and explain Why cryptocurrencies started, the types of coins and how you can get involved*.

*Not financial advice blah, blah, blah.

Why Cryptocurrency Started

I won't go in to detail on the technology (blockchain) which makes cryptocurrencies work, but if you're interested you can check out my previous newsletter above.

All you need to know is that blockchain is the underlying technology that cryptocurrencies work on.

Bitcoin was the first really successful cryptocurrency, there were attempts before, but bitcoin really started it all.

It started back in 2009 after the credit crash by a mysterious person/s called Satoshi Nakamoto - no nobody actually knows who they are or if they're a group of people. But Satoshi Nakamoto released a whitepaper outlining the idea behind blockchain and made it available to all as open-source software.

Bitcoin (with a captial 'B') is generally used to describe the blockchain technology which bitcoin (with a lowercase 'b'), the cryptocurrnecy, runs on.

Why start it?

After the aforementioned market crash of 2008, many people started to mistrust traditional banking institutions and governments. So there was a desire to start a currency outside of anyone's control.

And bitcoin was born!

Since then, bitcoin has become the most famous and successful cryptocurrency in the world. being used to purchase everything from pizza to NFTs. (Although not my NFTs - still waiting for my first purchase ??)

Crypto vs Traditional Currencies

Traditional currencies (Fiat) are issued and regulated by government institutions - this has it's pros and cons.

The main pro is that the value of the currency is usually kept stable because the government institution issuing it can control how much is printed and keep things like inflation, under control. This is where the value of the currency drops and it costs more to buy things.

Cryptocurrencies are the opposite - there is no regulation.

The value of any coin is based on the demand for it. So with like anything you might buy, if it becomes popular - the price goes up. This is what we've seen with bitcoin in the last few years. People have been desperate to purchase bitcoin so the cost to do so has skyrocketed.

The main con of Fiat currencies, at least in the eyes of crypto fanatics, is the control a single institution has over it. With this set-up a single organisation, oftern just a handful of people, have huge control over people's lives. As mentioned before, with crypto, no one controls it.

Why don't we use crypto for everything?

The biggest reason at the moment is the price fluctuation.

Imagine going to buy a loaf of bread in your local Tesco and everyone is using bitcoin. The person in front of you pays 0.001 bitcoin for their bread, by the time you come to pay the price has changed to 0.0500. This is what could happen if we switch to bitcoin today.

Of course, the value of say, Sterling, goes up and down regularly, but the changes are generally minimal - so Tesco charges everyone the same amount and will do price changes if there's massive prices changes.

What types of coins are there?

Cryptocurrencies can be grouped into different categories, these are some of the main ones.

Altcoins - These are basically all cryptocurrencies that aren't bitcoin - alternatives to bitcoin, hence altcoin.

Stable coins - Within altcoins, you have what's called stable coins. Coins like USDT (The 3rd biggest crypto) are matched to the value of the US dollar e.g. 1 USDT = 1 US dollar.

Although it doesn't always match exactly it does a pretty good job, helping get around the stability issue. The price won't increase dramatically but you're also unlikely to lose a lot of money with USDT.

Gaming coins - as the name suggests, these are coins used within games! Many games are now being built using blockchain technology and often a coin is created so players can purchase items within the game. Many people are expecting this area to grow massively this year.

Metaverse coins - ah the metaverse! My favourite verse, much better then the Marvel Cinematic Universe or this stupid universe we're in. The Metaverse will need a whole separate newsletter to explain it. But within the many metaverses, there are also coins you can use to purschase things.

Meme coins - These are basically the coins with stupid names like Dogecoin, Cumrocket and Cake Monster. They are usually started as a joke with the most famous being Dogecoin. Dogecoin grew in popularity helped alot due to support from Elon Musk - Tesla even accept it is a form of payment.

Next up!

Next newsletter I'll probably chat about how to buy Cryptocurrencies. I use Binance to purchase coins, there are many other platforms out there like Crypto.com, Coinbase and Luno.

If you fancy trying Binance I've set up a link where you get 10% back on every trade and I get 10% back. I could have kept the whole 20% for myself but I'm generous like that ??

Click the image or link below:

Referral link: https://accounts.binance.com/en/register?ref=HQG51WF5