Monday, May 17th, and I woke up and panicked when I saw Bitcoin price went down all the way to $36,391.7. All other cryptocurrencies were already down at least 20 to 40 percent. Over the weekend, it went down even further to 70% total. I invested when everything was at the peak. I don’t have any regret about getting into it because I think it has a lot of potentials.
First, what causes cryptocurrency to head down a spiral staircase? Earlier this month, China financial regulators “banned domestic banks and other financial institutions from supporting bitcoin” (CBSNews, 2021). Even worse, after Mr. Musk send a tweet criticizing how bad crypto mining is for the environment because mining use too much fossil fuels, price plumbed.
HOLD IT or SELL IT? Let’s talk crypto and understand more about what is going on. Articles are abundant out there explain about crypto. From NerdWallet to Investopedia, you can pretty much find anything you want to know. Here are some important highlights.
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What is cryptocurrency?
It is a form of payment. Think of crypto as chips in a casino or coins in an arcade where buyers exchange real money to obtain that form of payment. With it, the buyer can gamble or play any games they want. Blockchain is a technology that gives cryptocurrency a backbone.
How many cryptocurrencies are there?
As of January of 2021, there are over 7,812 different kinds of cryptocurrency, which made up of about $324.716 billion total market cap. (Coinmarketcap, 2021).
Blockchain technology is the reason why there are so many kinds of cryptocurrency. Each cryptocurrency is created with different purposes. For instance, in terms of currency, Bitcoin is the leading player in this category. Other currencies have utility functions because they allow other currencies to be built on top of their infrastructure. (Bobsguide,2021). A prime example of this is Ethereum which has Ethereum Virtual Machine (Ethereum,2021).
Why are cryptocurrencies so popular?
Social media is what drives the value of cryptocurrencies up. You see tons of posts about them on Facebook, Instagram. People are talking about it on Reddit, Quora, Twitter. Google shows that bitcoin, bitcoin price, bitcoin value, bitcoin to USA, and bitcoin mining are the top five bitcoin-related keywords by search volume (Investopedia, 2021).
Why are cryptocurrencies so volatile?
One day you see them up by 60%. The next day you see the same currency down by 30%. Yes, it is normal because they are not backed by any central banks or authorities. This market is unique because volatility is seen as a feature that attracts investors because of the sizable return if they catch the wave at the right time (CoinDesk, 2021).
Can I create my own currency?
Surprisingly yes, you can. This topic became increasingly popular, and there is a lot more information on this topic. Basically, anyone can create a currency within a solid 60 mins if they know what they are doing. A YouTuber goes by the name Ivan On Tech uploaded a video as early as February 2018 to show how to get it done in 15 mins.
How do I buy them?
I am currently purchasing crypto through CoinBase, an American company that operates as an exchange platform. Through only found in 2021, it quickly grew into one of the largest cryptocurrency exchanges in the U.S.A by trading volume (Wikipedia, 2021). I want to point out that Coinbase charges quite a significant amount for the transaction (roughly 0.03%). For example, if you spend $100, Coinbase will take $2.99 and leave you with 97.01 to invest. There are other exchange platforms A few popular ones are: Robinhood, Kraken, TradeStation.
That is it for the moment. I will come back with another blog this week to talk more about others crypto topics. Good luck to you, and please do your research.
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