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Why Crypto Continues To Expand As An Asset Class

12 June 2024 | 0 comments | Posted by Joseph Dunn in Money Talks

digital assets growing as an asset class

Unless you've been living under a rock, you must know that cryptocurrency has become quite the fad over the past years. With the rise of digitalization, globalization and online transactions, cryptocurrency has in fact jumped leaps and bounds in comparison to its competitor, the old-school fiat currency. 

Although you might think that cryptocurrencies are a bit tricky to understand and perhaps even feel slightly daunted at the task of trying to make sense of them, it actually is not as difficult to comprehend as you might think.

There are a few different crypto options you can go for and a few different things you can do with crypto, but beyond that, it is much like any other currency you have ever encountered.

If you've exchanged your local currency for a foreign currency or tried your hand at forex, you should be familiar with trading two different currencies. 

They have a unit price and trading pairs, with different order books and values fluctuating based on supply and demand. The difference with cryptocurrencies is that they remain in a grey market, where regulation is yet to catch up, and that means you're taking on more risk, which is why rewards can be so lucrative in this market.

Cryptocurrency options galore

One of the greatest things about cryptocurrency is the variety of assets you can access when you enter this industry. You might think that there is only one cryptocurrency, but this is, in fact, a general term used to cover a plethora of them. 

Perhaps you've heard of Tether, Dogecoin or Ethereum? 


Well, then, surely you must have heard of Bitcoin? 

Great, that one you have heard of, as well as the rest of the planet, as Bitcoin is, without a doubt the most popular cryptocurrency out there and is the first of its kind. It all started in 2009 when a group of people under the pseudonym name of Satoshi Nakamoto came out of the woodwork and crafted the first crypto. It took the world by storm, and although many people were weary of it at first, it gained traction rapidly and has not slowed down since. 

There are honestly so many different ones for you to choose from, all you must remember is to research each and every crypto option carefully before jumping in and other than that, you should be absolutely fine.

Today, Bitcoin is legal tender in El Salvador, and many governments recognize it as a digital commodity. Other cryptocurrencies remain in an unclassified space, with some suggesting that they should be classified as digital securities, different from Bitcoin.

How to get into trading cryptocurrency

Another interesting fact that you need to be aware of when it comes to cryptocurrencies is the fact that you can trade with them. Just as you'd imagine trading a stock, this is much the same.

This digital currency can be bought and sold just like any other; this is where the hype and attraction to this space comes from, as many traders look to the volatility as a way to make their fortune.

You can trade cryptocurrency at the spot market, which is the basic buying and selling of the asset, you can trade contracts like futures or options in some markets or take on more leverage by trading with margin, which is one of the most popular forms of trading with this digital currency.

The premise of margin trading is not too difficult to understand; all it entails is trading with borrowed money from a brokerage company. It is a great way to move through the trading journey but without risking your own investment. 

The only thing that you need to keep an eye out for here is the risk factor involved. Just as with any establishment borrowing your money, you have to pay interest on the amount loaned. This is much the same with the crypto you use from margin trading. 

There are a few extra bits that you need to consider when it comes to trading, namely how volatile the market is, what the sentiment around the trade is and how people perceive it. You might think that trading is all about stats and numbers but it is actually far more emotional than that. 

If a currency, such as Bitcoin or any other, is seen to have a bad reputation or if a story about its decline in value comes out, even if it's just a made-up rumour, chances are that the value of the stock will plummet. You have to be very careful when it comes to trading as there are many things that can influence the ups and downs a currency experiences. 

The safety and security of crypto

One further aspect that simply cannot be overlooked with cryptocurrencies is the safety and security that people can experience with them. You see, cryptocurrencies automatically run on something called cryptography, which is a form of code or algorithm that is used for one crypto to communicate with another one. 

This code is protected and highly secured, meaning that it is virtually impossible for anything or anyone to access it.

Beyond this, crypto also runs on a piece of tech called blockchain technology, which is one of the most advanced pieces of software out there.

Due to its decentralized nature, it allows people using crypto to do so anonymously and allows authorities to peek into what is happening. This offers more transparency and is built on the most secure blocks that are essentially hacker-immune.   

The safety and security that anyone looking to gain with cryptos is certainly a positive one, especially when using a blockchain like Bitcoin, but that is not to say there aren't dangers like bad wallet software or hackers looking to steal your funds.

As with any asset, your custody method is important and you need to remain vigilant when trading these assets.

Looking to the future

As you can see from the above, cryptocurrencies are a massive world that encompasses many different individual currencies, such as Bitcoin, Tether or Dogecoin.

It is currently a lucrative market and seeing how people are positively engaging with it, chances are that it will continue to be as popular as it is today, if not even more popular. 

Now that you know more about this digital wallet, will you take the time to research it further and then dive into some crypto trading yourself?

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Recommended reading

If you enjoyed this post and have a little extra time to dive deeper down the rabbit hole, why not check out the following posts on cryptocurrency and blockchain?

Disclaimer: This article should not be taken as, and is not intended to provide any investment advice and is for educational purposes only. As of the time of posting the writers may or may not have holdings in some of the coins or tokens they cover. Please conduct your own thorough research before investing in any cryptocurrency, as all investments contain risk.

Tags: Cryptocurrency, Digital Assets, Finance, Guest Post

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