Source:finance-monthly.com

Fiat currency is offered by a country’s central bank as a mode of payment and a store of value. Unfortunately, one has to exchange with another currency when they wish to trade beyond borders. The monetary system is responsible for managing cash flow, setting fiscal policy, and determining the value against major currencies.

Cryptocurrency is different because it is a digital currency not offered by a central monetary institution and is not limited by national borders. Therefore, users do not get physical cash but can transact across borders at the same rate. Over the years, the cryptocurrency market has grown, with millions of merchants accepting several of these e-currencies. Besides, tens of new coins have been released into the market, many of which have a substantial value.

The virtual currency runs on cryptography, which ensures that the transactions are secure. It also functions as a decentralised currency where each exchange is verified and the information is shared among the stakeholders involved in the transaction. Once the transaction is complete, the data cannot be altered, which is a strong security measure.

Using Cryptocurrency in Online Transactions

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Among the dozens of cryptocurrencies available on the market today, several have gained international recognition and are accepted by many merchants. Here are some common uses of cryptocurrency.

As a Mode of Payment

At their inception, most coins had a low value and could not be used as a mode of payment. However, many have grown in value over the years and are now a store of value. Online retail merchants were the first to accept coins, followed by service providers such as gaming platforms.

Today, hundreds of thousands of sites accept leading coins such as Bitcoin, Ethereum, Dogecoin and Litecoin. Many online casinos have included cryptocurrency as a mode of payment for their players. The crypto game called Plinko is one of the leading casino games you can play with a crypto deposit among tens of traditional games. You can also use coins to pay at restaurants, buy goods online, attend shows and access professional services around the globe.

Investment

Source:economictimes.indiatimes.com

Many crypto holders are in it to make some profit as the value continues to grow. Leading e-currencies such as Bitcoin and Ethereum have seen exponential growth in value in the recent past, despite the occasional dips. This has made investing in them a lucrative venture. While some coins like Bitcoin have slowed down in growth and tend to become very volatile, they are viable investments if the holder is willing to wait long enough for the market to adjust.

What Kinds of Coins Can You Buy?

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As explained earlier, there are tens of coins in circulation today. Many of these coins are forks of Bitcoin, but a few were built from scratch. Here are the three main types of investments that you can consider:

Bitcoin

Bitcoin was the first cryptocurrency that was ever produced. It set the standards for cryptocurrency and is the most valuable e-currency in circulation today. The market capitalization of Bitcoin exceeds $172.76 billion, the largest of any cryptocurrency. The smallest unit of Bitcoin is called Satoshi.

The e-currency was designed to have 21 million units in circulation at any time. This limited availability is one thing that has been driving appreciation in value. We have not mined all available bitcoin, as the circulation is around 18.4 million units.

Altcoins

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Altcoins are Bitcoin forks and alternative e-currencies. Despite having come from Bitcoin, many altcoins differ regarding algorithms and how they complete and verify transactions. Some, like Ethereum, also work as platforms where individuals can make apps on the blockchain.

There are more than a thousand altcoins available on the market. Popular ones include NEO, Litecoin, Ethereum and Factom.

Tokens

Tokens are products of altcoins such as NEO and Ethereum. These cryptocurrencies do not have a separate blockchain from the altcoins. Instead, they run via decentralised apps that were formed via the altcoins.

Unfortunately, tokens have a very low value compared to the two types of coins listed above. They can only be used to purchase items from the decentralised apps they operate.

How to Invest in Cryptocurrencies

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You can invest in cryptocurrency by just holding on to the coins. While you can buy from friends and other merchants, you should purchase huge amounts of coins from crypto exchanges. Some people do it with gift cards, fiat currencies, or by setting up investment trusts. When you want to profit from the investment, you need to sell your stash of coins and get the cash in fiat or any other e-currency.

Storing Cryptocurrency

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You can hold e-currencies in crypto wallets. These wallets can be used both online and offline. Crypto wallets have two keys: a public and a private key. The public key is the address through which you receive payments. On the other hand, the private key is more like a signature that signs off payments.

Many crypto wallets can store different coins at the same time. Others allow you to purchase coins using fiat cash via deposit methods such as cards and e-wallets. Payment providers and crypto exchanges support online e-wallets.

On the other hand, cold wallets, or offline wallets, are stored on a device like a computer and are more secure than online ones. However, it is a little complicated when trying to complete a transaction.

E-currencies are the payment and investment methods of the future. As new digital technologies such as the metaverse and online gaming become more refined, cryptocurrencies will play an important role in enhancing transactions. Many service providers and retail outlets will also join the pool and accept coins as a method of payment.