Over the past few years, the cryptocurrency market has grown significantly, with major cryptocurrencies such as Bitcoin and Ethereum becoming some of the most popular assets among investors. The rapid development of this technology and the introduction of cryptocurrency-based derivatives have contributed to the popularization of investments in this interesting group of assets.
What is Bitcoin?
Bitcoin is a form of digital currency, created and stored electronically. Unlike traditional physical currencies such as dollars or euros, bitcoins are not printed. Instead, they are mined by specialized computers located around the world and supporting the system by validating blockchain transactions.
Another significant difference between cryptocurrencies and physical currencies is banks. The mission of the central bank is to stabilize the value of the national currency. However, there is no such thing as a Bitcoin Bank. This is due to the fact that, in a way, Bitcoin is a bank in itself. This independent ledger provides information about the holdings of all its users, as well as, m.in, transaction history and. Moreover, the number of Bitcoins is limited, which also limits the role of the supervisory institution.
While central banks may be printing more and more cash, Bitcoin has a limited supply – it is estimated that by 2140 all 21,000,000 Bitcoins will be in circulation. So it can be said that, as in the case of gold, we have limited resources of Bitcoin. There are also other cryptocurrencies that are gaining more and more popularity. Bitcoin’s success has led to the development of many alternative cryptocurrencies, often referred to as “altcoins”. Most of these altcoins offer their own versions of the Bitcoin protocol, and these are interesting projects in their own right. Their popularity is most certainly supported by the fact that most of them are still cheaper and much easier to buy or mine than Bitcoin. Let’s take a brief look at the most important altcoins:
- Litecoin – like most altcoins, it is based on the Bitcoin protocol, but it is designed to be much cheaper and fairer to mine than BTC;
- Ethereum – A cryptocurrency also called “Bitcoin 2.0” is an alternative to Bitcoin. Its value skyrocketed when BTC issues arose and when an upgrade to its system was announced. The latter has made Ethereum payments easier and faster;
- Ripple – an open-source peer-to-peer cryptocurrency that offers all the features of Bitcoin, but also has advanced capabilities such as instant transactions.
- While Bitcoin still remains the most popular of cryptocurrencies – Ethereum, Ripple, Litecoin, and other altcoins continue to grow. Cryptocurrencies are a financial revolution that will introduce a number of changes.
What factors affect cryptocurrency prices?
The cryptocurrency market is much more volatile compared to traditional financial markets. This is due to a number of factors, which include:
- Bitcoin price – this is due to the fact that the overwhelming majority of cryptocurrencies tend to follow the valuation of Bitcoin, which is a barometer of the entire market. Also, any sharp movements on the Bitcoin chart will have a similar impact on other cryptocurrencies.
- Situation on traditional markets – cryptocurrencies do not operate in a vacuum and are often correlated in some way with other asset groups. There may be a situation where the stock market will clearly gain, while digital assets will be under strong pressure from sellers.
- Increasing adoption of cryptocurrencies in everyday life – some of the cryptoprojects can be implemented over time by other entities, e.g. banks and used for practical purposes, which in turn often increases their market valuation.
- Regulations – in the initial period of its existence, cryptocurrencies were basically unregulated. Over time, however, digital assets have come to be the focus of regulators and central banks. Announcements of new regulations often lead to rapid price movements.
This is why it is crucial to stay up-to-date on any news that could have an impact on the cryptocurrency market. Investors have access to the most crucial information regarding digital assets through the “News” section, where our analysts provide an overall picture of the market and highlight potential investment opportunities. When analyzing the market, it is also important to have access to real-time prices, which is possible with the xStation 5.
To access the latest news from the crypto market, simply select the “News” section on the platform.