Cryptocurrency is the word on everyone’s lips, but what caused the latest crypto crisis? Here we explore what’s new in cryptocurrency market news with our quick and easy guide to blockchain, fungible tokens and the digital currencies’ boom and bust.
The crypto crisis: The latest in cryptocurrency market analysis
The world of digital currency is volatile and highly complex for those who are new to cryptocurrency trading and investment.
Here we explain how Blockchain, fungible and non-fungible tokens work and how cryptocurrency market news has risen to such prominence.
Read on to discover the advantages and disadvantages of the traditional stock market vs cryptocurrency and find out what triggered the current ‘boom and bust’ in digital currencies’ value, according to cryptocurrency market analysis.
Our quick and easy guide to today’s cryptocurrency market news
What is Blockchain?
Blockchain is a storage method, often described as a ‘ledger’ – a record of transactions, orders, updates and other ‘events’ that is distributed across hundreds of thousands of computers, each with its own copy.
This technology is decentralized and extremely transparent. It’s also incredibly resilient. Its data cannot be lost or deleted, because there is always a back-up elsewhere.
What are fungible tokens?
Crypto tokens are units that Blockchain-based projects or organizations develop so their users, creators and developers can invest in them.
The two main tokens are fungible and non-fungible. Cryptocurrencies, such as Bitcoin and Ethereum, are fungible tokens. They run on their own Blockchain.
Fungible tokens are divisible, interchangeable and non-unique, a bit like ‘real world’ currency. They store value, and can be used to make payments.
Non-fungible tokens (NFTs) are unique and cannot be divided, such as a piece of music or art, stocks and shares, service subscriptions and proof that a user has a particular qualification. NFTs store data, and are built on top of a related Blockchain.
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What is cryptocurrency?
- Cryptocurrency is a digital payment system that does not use physical money or rely on traditional banks for verification.
- Users store their funds in digital wallets. They have keys that allow them to make encrypted, peer-to-peer transactions, all of which are recorded on the Blockchain.
- Units are created by ‘mining’ – whereby computers solve complex equations in order to generate digital coins. Investors can also buy ‘crypto’ from brokers.
- Bitcoin, founded in 2009, was the world’s first cryptocurrency and it remains the best-known, although its creator continues to be anonymous.
- Ethereum is the next most popular cryptocurrency and was developed in 2015.
Why is cryptocurrency so famous right now?
- Some users invest in cryptocurrency for profit. Just as in traditional stock market trading, cryptocurrencies are subject to ‘boom and bust’.
- The global pandemic forced many affluent workers to stay at home and save their disposable income. Many invested in crypto, which caused a boom in its value.
- Bitcoin’s price soared from $5,000, in March 2020, to $60,000 in 2021. Ethereum climbed from $120 to $5,000. There was also a surge of investment in cryptocurrencies’ underlying technology.
- Cryptocurrencies are not immune from real world problems, however, and the war in Ukraine, rising global inflation and increased borrowing costs slashed Bitcoin’s value.
- This triggered a crash across the entire cryptocurrency market.
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What is the cryptocurrency crisis?
- Aftershocks from the massive slump in the value of cryptocurrencies continues to be felt – with one of the industry’s most powerful platforms collapsing entirely.
- One particular platform was worth $32 billion before it filed for bankruptcy in a matter of days, wiping billions in value from across the trillion-dollar cryptocurrency market.
- There are concerns traditional markets will now be affected, with some investors and industry insiders calling for increased regulation and oversight.
Cryptocurrency market news is complex and constantly evolving
The cryptocurrency world is intricate and volatile and it’s important potential traders and investors understand the basics.
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