What are cryptocurrencies?



19 października 2021
What are cryptocurrencies?

What are cryptocurrencies?

In the world of retail speculation, cryptocurrencies are a real star today. When almost everyone invests in them, let's take a look at what they are and should you be interested in them in order to finally find an answer to the question - is it worth investing in Bitcoin and related instruments?

Cryptocurrencies are instruments built on the basis of blockchain technology. Loosely translated, the word "blockchain" means the same as "blockchain" and is a very apt name. It concerns a system composed of many interconnected blocks - information carriers that contain data on transactions conducted in cryptocurrency.

At the same time, these blocks cannot be "opened", which excludes manipulation, so it determines the security of the cryptocurrencies themselves, which are very much appreciated by their users.

Long-term investments in cryptocurrencies - is it worth it?

If you want to know if it is worth investing in Bitcoin or other cryptocurrencies, first of all, you need to determine the nature of these investments. In the case of long-term investment, it all depends on the instrument. On the market you will find tokens that are merely curiosities used for short-term speculation - like the recently popular Dogecoin. Next to them, we find many useful currencies that offer innovative solutions.

Therefore, when calculating the profitability of a given investment, you need to collect as much information as possible about the coin you are interested in. Your task will be to assess how the solutions it proposes will be adopted by the industry in the long term. In such a scenario, the history of price fluctuations will only be an addition, which in the case of holding a position for months or even years, will be replaced by fundamental information. If you already know that you want to invest in cryptocurrencies, you can do it both on exchanges and in our exchange office. The instruments proposed by Impily include, among others Bitcoin - BTC, Bitcoin Cash - BCC, Ethereum - ETH or Ripple - XRP.

Short term cryptocurrency trading

The situation is completely different when you plan to trade on cryptocurrencies. Then, the most important thing will be to recognize the short trends in the market and trade accordingly. You need to know that tokens work just like the rest of financial instruments, meaning that their price moves because of the inequality between buying and selling power.

For example - imagine that at each price level of the Bitcoin market, there are 100 passive orders. Regularly, buyers and sellers of cryptocurrency at the market price execute these orders, contributing to the occurrence of fluctuations. If there are currently ten buyers and sellers in the market rhythmically, the price will remain the same. However, when for every ten "sell" orders, there will be one hundred and fifty "buy" orders, there will be more Bitcoin buyers than passive and aggressive sellers, and the price will start to rise. Knowing how to take advantage of these circumstances is crucial if you want to be successful in short-term speculation on cryptocurrencies. Remember that you will need appropriate software to analyze trading information in this respect.

Short-term trading is also associated with an increased risk due to significant fluctuations in the exchange rate that Bitcoin is subject to due to low liquidity. Is it worth considering short-distance trading in such a situation? It depends on your experience - if you are a beginner, investments may be a much better solution.

Cryptocurrencies is it worth it? Advantages and disadvantages of investing in tokens

You need to know that blockchain technology and the cryptocurrencies designed with it are relatively fresh. Of course, this has many advantages, but it raises the investment risk, because a large part of the tokens and solutions they were based on have not yet survived the test of time.

Buying a cryptocurrency is therefore associated with the risk of investing at a very early stage of its development and in many respects can resemble trading on the so-called penny stocks. It is known in advance that the vast majority of projects will turn out to be a failure, and only a small fraction of them will bring you satisfactory profits.

The currency of the future?

Many people answering the question - is Bitcoin worth investing in, treat this cryptocurrency as an alternative to fiat money. Classic currencies, such as zloty, euro or US dollar, can be artificially put into circulation in the process of "printing" money.

This problem does not exist for Bitcoin - is it worth taking a closer look at it? If so, it is because it is a currency with a maximum supply of 21 million tokens.

For many investors, it is also a potential global means of payment, which is just waiting for its five minutes. This is expected as governments embark on a full transition from traditional to digital currencies. At the same time, the European Union has already announced the creation of its digital currency, and pilot tests of the digital Juan were carried out in China.

No matter what lies ahead for Bitcoin, we can be sure that it belongs to virtual money. Attention! The above article neither in whole nor in part constitutes a "recommendation" within the meaning of the provisions of the Act of July 29, 2005 on trading in financial instruments or the Regulation of the European Parliament and of the Council (EU) No. 596/2014 of April 16, 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6 / EC of the European Parliament and of the Council and Commission Directives 2003/124 / EC, 2003/125 / EC and 2004/72 / EC and Commission Delegated Regulations (EU) 2017/565 of 25 April 2016 supplementing Directive 2014/65 / EU of the European Parliament and of the Council as regards organizational requirements and operating conditions for investment firms and defined terms for the purposes of this directive. The content contained on the website does not meet the requirements for recommendations within the meaning of the above-mentioned act, incl. do not contain a specific valuation of any financial instrument, do not rely on any valuation method, and do not identify investment risk.

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