A Brief History of Cryptocurrency
Cryptocurrency provides a modern way of paying for goods and services. It’s a form of payment that’s making a huge impact on how countries and entities use the currency.
The current number of cryptocurrencies is multiplying as they’re being incorporated into this digitalised world. Here’s a brief history of cryptocurrency to further understand how it works:
The Cryptocurrency Timeline
Cryptocurrency started back in 1983 when cryptographer David Chaum developed a digital transaction system called eCash. It was considered the pioneer in cryptocurrency that transferred funds anonymously, and it also featured a secure transaction for people who use the internet for micropayments. eCash was created under David Chaum’s company called DigiCash that eventually filed for bankruptcy in 1998.
Although large banks were interested in the platform, DigiCash and the eCash patents were sold off. However, in 2018, David Chaum launched a new start-up that focused on cryptography. Although the term “cryptocurrency” was not coined until the 1990s, Chaum’s works created important frameworks for the future of exchanging goods and services.
During the 2008 global economic downturn, Satoshi Nakamoto, whose real identity is still anonymous to this day, created a whitepaper regarding the potential of cryptocurrency and made the first Bitcoin transaction. He also invented blockchain technology, which serves as the public transaction ledger of Bitcoin and other cryptocurrency platforms.
After about two years, developers had successfully managed the blockchain that increased the number of Bitcoin transactions and paved the way for new cryptocurrency platforms that helped improve the footprint of digital tokens. Although it had some setbacks around the mid-2010s, the value of 1 Bitcoin reached $10,000 in November 2017 and it became the top cryptocurrency choice around the world. In March 2021, the total value of Bitcoin surpassed $1 trillion.
Types of Cryptocurrency
Aside from Bitcoin, there are plenty of other cryptocurrency platforms like Ethereum, Dogecoin, Litecoin and Cardano that are considered important players in the crypto space. They have become a vital, central discussion in most finance-related topics and have gained acceptance as an alternative to the daily government-issued currency.
Here are some important cryptocurrency alternatives to Bitcoin:
Ethereum creates decentralized financial products that can be accessed for free anywhere in the world, making it appealing to countries with no state identifications or infrastructure. It also allows Smart Contracts and Decentralized Apps to be operated without any interference, fraud, or downtime. It comes with its own programming language that runs on blockchain technology.
Dogecoin is an open-source cryptocurrency considered a sarcastic meme coin. It was initially created as a joke in 2013 with an image of a Shiba Inu dog as the logo. It has since gained popularity in the cryptocurrency space in 2017, with notable features like unlimited supply, low price, and technology derived from Litecoin.
This peer-to-peer cryptocurrency was created by Charlie Lee in 2011. It shares a lot of similarities with Bitcoin as it’s based on Bitcoin’s original source code. It is used for cheaper transactions and has a higher coin limit market cap than Bitcoin. Because the transactions are quicker and cheaper, the mining process is also faster.
Charles Hoskinson, one of the founding members of Ethereum, developed Cardano in 2015. It’s a blockchain platform that runs on Ouroboros, and it aims to be a decentralized application development platform. Its main applications are in traceability and identity management. Traceability is used to track a product’s manufacturing processes and eventually remove the market for counterfeit goods. Identity management is used to simplify processes that need data collection from multiple sources.
Polkadot is a proof-of-stake cryptocurrency that aims to deliver information exchange between blockchains. It is founded by Gavin Wood, another founding member of Ethereum. Its protocol is designed to connect oracles and permissioned and permissionless blockchains to let systems work together.
Convenient Crypto Trading with Fair Forex
Fair Forex is a reliable platform you can trust, whether you’re a first-time trader or searching for a platform to learn crypto trading. You’ll get free data, trading tools and professional support from our expert traders.
Book a consultation with us today by calling 1-844-600-3247 or by filling out our online form.
Tips for Trading Cryptocurrency
The first half of 2021 saw cryptocurrency’s market value fluctuate, peaking in January and plummeting in May, then surging back up again in June. As the time of writing, the market capitalisation of the world’s largest cryptocurrencies (Bitcoin, Tether, and Ethereum) crossed $1 trillion after gaining $396 billion since the start of 2021.
It comes as no surprise that many traders are now very interested in trading cryptocurrencies. The market might be volatile, but the industry’s gains are so massive that savvy traders can benefit from the windfall.
If you’re interested in benefiting from the current market trends, here are some tips on trading cryptocurrency and a few things about the market that you need to know.
If you have limited capital, trade instead of investing.
Why engage in trade instead of investing in cryptocurrencies? It has the advantage of affordability: trading doesn’t require you to spend money as investing does. You only need to pay a minimal fee to access a broker’s platform and speculate on the price movement of cryptocurrencies.
In contrast, an investor must buy financial instruments (e.g., cash instruments, government bond issues, stocks and equity, shares, mutual funds, precious metals, commodities) that are expected to increase in value over time. Additionally, you need to spend more to gain more. Investing too little might not generate gains that are substantial enough to justify the money and time spent on letting an investment grow.
Set profit targets.
This is elementary and likely one of the first things you read about when you first read up on cryptocurrency trading. It is worth including in this list, however, because many traders lose sight of it when they get caught up in the excitement of the trade.
To reinforce your profit target, arrange a stop-loss order with your broker. It specifies a “stop price” which when reached will signal the broker to sell or buy the stock. As soon as a stock reaches its stop price, the stop order will be executed at the earliest opportunity.
The purpose of the stop-loss order is to limit your losses in case your position becomes a losing one. It’s very helpful when you’re taking a long position and the price of the currency drops.
So, if you buy at $100 through Fair Forex and set a stop-loss order at $98, we will immediately close your position at the stop-loss price or when the price decreases to $97.5, whichever can offer a better price to you.
Let us now discuss trading strategies for cryptocurrency which are widely practised among both amateur and seasoned traders.
Market volatility is one of the biggest risks in cryptocurrency trading. If you want to test the waters without exposing yourself too much to potential losses, you can try your hand at day trading.
One of the disadvantages of being unregulated new currencies is that price movements tend to be big. This explains why the dips and rises that the market experienced earlier this year are by hundreds of millions. Traders must, therefore, use risk management tools (hence our suggestion of using a stop-loss order above) and withdraw their position at the right time.
With day trading, you make profits from the small gains that your position earns within the day. You exit your position within the next 24 hours, taking advantage of market volatility to generate an income.
For example, a day trader for cryptocurrencies is on the lookout for currencies that are experiencing a surge in trading activity because of a promising news announcement. High volume and liquidity are also crucial for day traders to maximise profits (the latter is a must for executing quick trades). Once they’ve registered gains in their current position, they can decide to exit and not wait for another price movement. There’s no telling if the next big one will result in a huge gain or loss for the trader.
To earn from day trading, you have to make multiple trades in a day. As discussed, the gains are small per trade, but your total earnings can be high if you make many successful trades in a day.
Diversify your active trades.
Never put all your eggs in one basket. Yes, traders can earn millions from crypto trading, but they can also lose thousands of dollars in just a snap. You can reduce your risks by day trading or speculating on non-crypto instruments.
Bear in mind that Bitcoin affects the value of all other cryptocurrencies: if it declines, so do the rest of the existing digital currencies. Diversifying by trading more cryptocurrencies, therefore, will not work as well as diversifying by trading different financial instruments.
Keep in mind these four tips when trading cryptocurrency at Fair Forex. To get more helpful trading tips, reach out via our Help Centre or talk to other, more experienced traders via our telegram chat group.
Make the most of what cryptocurrency trading has to offer at Fair Forex. Contact us today.