The Evolution of Cryptocurrencies and the Best Currencies to Trade:Introduction
The terms cryptocurrency and blockchain were not in existence ten years ago. Today, the industry pioneered in 2009 is worth more than $400 billion.
It all started after the financial crisis. For starters, this was a global financial crisis that came about after a 8 year bull run in the financial markets. Investment banks had previously bundled risky types of financial products and sold them to people. Most of the people who bought the assets – known as mortgage backed securities and collateralized debt obligations – were individuals with low credit scores.
In 2008, Swiss bank, UBS announced its financial results that shocked the world. In the statement, it said that its bad debt book had soared. In response, other financial companies like Lehman Brothers and Bear Sterns fell because they had more exposure to these assets. Bear Sterns, whose stock traded at more than $70 was bought by Morgan Stanley for less than $10 a share. Lehman Brothers was forced to bankruptcy because it could not raise the necessary capital.
As the financial system collapsed in America and around the world, individual people were the most affected. Many were fired from their jobs and many were forced to surrender their houses. The unemployment rate soared to above 10%. To prevent further crashes, the government injected billions of dollars to the banking sector. It even rescued companies like General Electric, General Motors, and insurance giant, IAG.
These bailouts were not well-received by the Main Street, which realized that it was not well-protected from the government. They lost hope in the government and its regulators.
In response, a person – or group – who called themselves Satoshi Nakamoto devised a plan. The plan was to create a new system of financial system, one which was not controlled by the government. In this model, people would generate their own currencies. Unlike the fiat currencies that were supplied by the government, people would need to mine these ones.
The concept came to be known as bitcoin. At first, bitcoin was used in the dark web. The dark web is a series of websites that are not accessible using the normal browsers. Instead, people use Tor browser to allow them to buy and sell illicit items such as drugs and guns. With bitcoin, it was impossible to track people involved in this industry.
Today, more than 1,800 cryptocurrencies have been developed. They have a market capitalization of more than $360 billion. They range from bitcoin which has a valuation of more than $140 billion to unknown currencies like () which has a valuation of under $1 million.
Of course, most of these currencies are complete frauds. Most of them will fall because they are not necessary.
As a cryptocurrencies trader, you should focus on the currencies that are in the limelight. These include currencies like bitcoin, ethereum, ripple, bitcoin cash, and monero. While no one can accurately predict how these currencies will continue to trade, one can bet that if the industry continues to do well, these are the currencies likely to dominate. For example, bitcoin is now traded at the biggest futures exchanges. There are also hedge funds focusing on bitcoin and just last week, Goldman Sachs announced that it would start investing in bitcoin.
The Evolution of Cryptocurrencies and the Best Currencies to Trade:Useful Tip