What are crypto assets? Find out how they work (types, utility, importance, characteristics) and what make cryptocurrency valuables [2021 GUIDE].
What are crypto assets?
A cryptoasset is a cryptographic digital medium, which is used to carry out financial transactions. It is also known as cryptocurrency.
The Organization for Economic Cooperation and Development (OECD), in its document How to deal with Bitcoin and other cryptocurrencies in the System of National Accounts? define a cryptoasset as:
“a cryptocurrency is an unregulated digital (or virtual) currency designed to work as a medium of exchange that uses strong cryptography to secure financial transactions, control the creation of additional units, and verify the transfer of values”.
The cryptoasset market continues to grow globally.
How to invest in crypto assets?
Investing in cryptoassets can be done through mining or automated trading.
The OECD explains, in its document, the mining process, as follows:
“Anyone with access to the internet and suitable hardware can participate in mining, without having to be approved by any central entity. The mining process involves compiling recent transactions into blocks and trying to solve a computationally difficult puzzle. The participant who first solves the puzzle gets to place the next block on the blockchain and to claim the rewards. The rewards consist of both the transaction fees associated with the transactions compiled in the block and a newly released Bitcoin”.
Automatic trading, for its part, uses software to carry out financial operations. It is the main method of investing in bitcoin.
How do crypto assets work?
The operation of crypto assets is based on the following characteristics:
- Crypto assets arise through mining: miners solve complicated problems and receive a profit.
- Users have virtual currencies in their wallet and carry out transactions.
- The operations that are carried out are irreversible, fast and confidential.
- Worldwide accessibility.
What is a cryptocurrency and how does it work?
Cryptocurrency is a digital currency, which is used as a medium of exchange. Its main characteristic is its cryptography to operate safely.
Crypto-asset transactions work through a wallet.
The user configures the address with two cryptographic keys: one public and one private.
The public is sent to initiate and verify the operation, while the private is the signature to transfer the money.
What are the top 5 cryptocurrencies?
The top 5 cryptocurrencies with the highest market capitalization are the following:
The Barone Enterprise Study Center took the data from the beginning of January as a reference to prepare the following table.
The difference between bitcoins and other crypto assets is considerable, both in capitalization and in market price.
Typically, ethereum, tether, and XRP rank second, third, and fourth. The fifth place is disputed between the chainlink, bitcoin cash and litecoin.
What are the cryptocurrency advantages and disadvantages?
The advantages of cryptocurrencies are as follows:
- Security, through the blockchain: all transactions are certified.
- International accessibility.
- Independent of banking entities.
- Price volatility in the market: the investor must find the perfect opportunity to make a financial investment.
These last two characteristics can also be perceived as disadvantages.
Lack of regulation and market volatility can generate mistrust among users.
What values cryptocurrency?
The value of cryptocurrencies depends on the supply and demand of users.
Each cryptocurrency behaves differently in a market, independent of governments and banks.
How much was a bitcoin worth in 2018?
In 2018, the average value of bitcoin (btc) was 7,176$.
The crypto left behind a high price: 20,089$, in December 2017.
Thus, as shown in the following graph, the year began with a reduction of 10,000$.
The price was stable from March to June; in July, the decline began and, at the end of 2018 the price was 3,689$.
How can I make my own cryptocurrency?
To create your own cryptocurrency, the first step is to mark the objectives of the project and look for the difference with the rest of the crypto assets.
The reason is that the crypto wallet has great competition.
The user has three ways to create a cryptocurrency:
- Use a platform to create the blockchain and its cryptocurrency: this option is quite limited.
- Originate a token that works on a pre-established chain of blocks: it is more difficult than the previous one, but the results are better because the blockchain is more developed.
- Create a cryptocurrency from scratch based on the code of another cryptocurrency and modify it, according to the objectives: it is the most complicated choice.
Who regulates cryptocurrencies?
The cryptocurrencies regulation is one of their main characteristics.
The independence of governments and banking entities represents a change compared to traditional currencies.
From the International Monetary Fund (IMF), Christine Lagarde pointed out in an intervention the possibility of banks themselves issuing digital currencies:
“Banks and other financial firms, including startups, could manage the digital currency. Much like banks which currently distribute cash.”
The President of the IMF supports, publicly, the regulation of virtual currency.
Who created the cryptocurrency?
In 1998, Wei Dai suggested the idea of creating a new cryptocurrency, alien to banks.A decade later, Satoshi Nakamoto published a paper about creating an online payment method without intermediaries. This currency is called bitcoin.
In 2009, the cryptocurrency began to work and was the origin of the following cryptocurrencies, which dominate the market.
To this day, Nakamoto’s identity is unknown. There are theories about whether his name is a pseudonym or refers to a work team.
A cryptoasset is a cryptographic digital medium, which is used to carry out financial transactions.
What conclusions can you draw from this guide?
- The investment in virtual currencies can be made by mining or automatic trading.
- The top 5 crypto assets are, based on market capitalization, bitcoin, ethereum, tether, XRP, and litecoin.
- Cryptocurrencies are characterized by their volatility, accessibility, speed and security.
- They are independent of banks and governments. Although, the IMF is aware of the importance of this type of currency for citizens.
- There is the possibility of creating a crypto, through three processes, with different levels of difficulty.
- Satoshi Nakamoto was the creator of the first cryptocurrency on the market, bitcoin.
Barone Enterprise is a company that takes advantage of the market opportunities of cryptocurrencies and develops and distributes automated trading bots to generate passive income.