There’s a sort of enigma around the cryptocurrency industry. As time passes, an increasing number of people are trying to test these waters by making investments in digital currencies. However, since the industry is still new and evolving, we bet that there are several things that you’re yet to learn about. We’re going to spill the beans and reveal some facts that every crypto investor must know and consider before jumping to buy crypto instantly.
Bitcoin’s number is limited
Since bitcoin is a digital currency, it is only natural to think that they’re renewable and that there are endless supplies of bitcoin to be accessed. Well, here’s the truth–there are only 21 million bitcoins that can be mined. This is because the creator(s) of bitcoin wanted to make an asset that imitated something as valuable as gold. Being a limited resource, bitcoin’s value also increases as the supply keeps going down.
Mining is an act of completing transactions on the Bitcoin blockchain. After every successful mining attempt, you’re rewarded with bitcoins. Note that this reward is halved each time a set of 210,000 blocks are mined. On average, this happens once every five years. According to some estimates, in March 2022, there were some 19 million bitcoins in circulation. This makes mining an even more attractive option as now there are only a few more bitcoin tokens that are left to be mined.
Who created bitcoin?
Do you know who is behind the multi-million dollar bitcoin? Neither do we! In fact, no one really knows who created bitcoin. Whether it was a person or an organization–all that is out in the public is that they go by the pseudonym of Satoshi Nakamoto. A famous theory around this is that the name is actually an acronym that indicates the coming together of some top tech firms namely: Samsung-Toshiba-Nakamichi-Motorola.
The first commercial Bitcoin transaction was to buy a pizza
It’s probably what most of us might like to spend our first paychecks on and this man from Florida was no different. On 22 May 2010, a sum of 10,000 bitcoin was paid to buy two pizzas. This has been regarded as the first-ever commercial bitcoin transaction in history.
We bet he’s regretting that decision now because 12 years ago, 10,000 bitcoins were just $40 that would today be well worth more than $350 million.
Today, we have more than 9,500 cryptocurrencies circulating
As of March 22, more than 9,500 cryptocurrencies are now in the market. It is now a lot easier to buy crypto instantly with so many options to choose from but do remember that there’s no one-stop-shop for these on exchanges. A few of them require their own wallets. Even though now it is simpler to create a cryptocurrency, the market is dominated by the top 20 coins that take up 87% market share.
Some cryptos, like Ethereum, are more than just a coin
Cryptocurrencies can be very diverse and offer more functions than being mere forms of exchange. For instance, the Ethereum blockchain can execute smart contracts and also b useful for the supply chain management. Besides processing payments and having the crypto ether, for transactions, Ethereum’s blockchain network allows different crypto coins to be created on the platform.
You can’t ban crypto
There is such ambiguity around cryptocurrencies that several nations have even considered banning them altogether. But, here’s the catch–it is physically impossible to ban cryptocurrencies. The platform is entirely digital and literally, anyone and everyone can have a crypto wallet. Thus, there may be regulations but banning the cryptocurrency market is out of the question. That said, several nations like Alergia, Cambodia, Bolivia, Educator, Bangladesh, and Nepal have removed or limited rights that deal with crypto.
CryptoKitties is a blockchain game, the first of its kind
CryptoKitties aren’t exactly currencies. It is one of the first blockchain games that enables you to breed your own unique digital cats that cannot be replicated. Built on the Ethereum blockchain, these kitties cannot be copied and thus, have their own unique value.
China is the biggest cryptocurrency miner
China alone accounts for nearly 75% of the mining network! Mining is the process of validating crypto transactions before they’re added to the blockchain’s ledger. At present, this is a very attractive aspect of the crypto market given the high-value cryptocurrency rewards they bring.
NFTs don’t count as currencies
NFTs are very popular right now, they are digital assets and they cannot be replicated. Yet, they’re not cryptocurrencies, and thus, they cannot be used as a medium of exchange.
Investing in NFTs can be a lot like buying a rare piece of art or a collection. This is what the broader understanding of NFT is like rare, digital collectibles that could have a lot of value because they are one of a kind.
Dogecoin was really a joke
The alternative to a rags-to-riches story in the crypto world is perhaps this meme-to-money story of the Dogecoin. The Dogecoin was actually a practical joke created in jest when there was a barrage of new cryptos entering the market. It stands out with the image of a rather surprised Shiba Inu dog made after a popular 2013 meme. Though its prices are highly volatile, a lot of money including that of Tesla’s Elon Musk is now riding on the Dogecoin.
Cryptocurrency prices are extremely volatile
Cryptocurrencies and volatility go hand-in-hand. The value of a currency could dramatically change in a matter of a few hours, the most recent example being that of LUNA whose total worth dropped to just $4 overnight. Besides, there is so much attention around cryptos including that of celebrities, that many consider it to be nothing but a short-lived fad. If that is even remotely true, there could be some serious losses to be incurred.
You still have to pay taxes on your crypto gains
So if cryptocurrencies are decentralized and unregulated, you don’t have to pay taxes? That’s not the case if you’re making gains–since then, you attract capital gains taxes. The way you manage crypto and how you acquired them depends on whether the taxes are levied on long-term or short-term investment gains or as income.