How can i start investing in cryptocurrency in 2022?

 Virtual currency: how can I start investing in cryptocurrency in 2022?

What is a cryptocurrency? What is it used for? What do they look like? What makes them valuable? What are the different types of cryptocurrencies? how can I start investing in cryptocurrency? What are the cryptocurrency trends for 2022? 

How they work, usage and recommendations, taxation - learn everything you need to know before investing in digital currencies like Bitcoin, Ethereum, Dogecoin, Binance Coin, and Ripple.... which are no longer virtual currencies.

Cryptocurrency and virtual currency: what is it?

Definition of cryptocurrency

A cryptocurrency is both a cryptocurrency and a peer-to-peer payment system. 

These digital currencies are therefore virtual currencies since they are characterized by the absence of a physical medium: there are no coins or banknotes, nor is it possible to pay by check or credit card.

There are alternative currencies that, with few exceptions, are not legal tender in any country in the world. 

Their value is not tied to the price of gold or the price of conventional currencies, and they are not regulated by a central body or financial institutions. There are no central banks to preside over them. 

However, security and transparency are their greatest strengths. 

Cryptography protects transactions, which are all verified and recorded in the public domain, which means blockchain technology ensures both confidentiality and authenticity.

Blockchain: the fundamental technology for cryptocurrencies.

Cryptocurrencies are all based on the same principle: the blockchain. Cryptocurrencies are a sequence of numbers stored on a computer in the form of a blockchain. 

The principle is actually quite simple and is explained particularly well in the article Bitcoin and cryptocurrencies, new digital currencies: "Take a database. 

Allow anyone to make changes to this database, under the sole condition that they declare themselves as a "member". 

Introduce a very long and very complex verification procedure to be performed every time a certain number ('block') of changes is requested. 

This procedure is not performed by a single validator, but by all voluntary 'members'. 

After validation, the 'block' of changes will be dated and added to the others in the registry. Finally, let everyone read the ledger and you have a blockchain database. 

Then it is the network (the set of peers) that has to validate and confirm each transaction.

This technology and system is the basis for the vast majority of cryptocurrencies, but the potential applications of blockchain go even further. 

In fact, it could disrupt the entire financial sector, but also some sectors, such as legal or administrative, making it possible to dispense with trusted third parties. 

Notary deeds, notaries, or land registries are no longer necessary, as this distributed ledger technology helps make data more secure and transparent. 

Finally, blockchain technology is a technology whose database cannot be altered without meeting certain conditions.

What are NFTs?

NFTs are a fad and a passion among crypto-currency investors. What are they? First of all, it is important to understand that NFTs are tokens that are also based on blockchain technology. 

However, they are not crypto-currencies because, unlike virtual currencies, they are not convertible. While 1 BTC = 1 BTC, 1 NFT is not equal to another NFT because NFTs have unique characteristics and evidence of authenticity and signature, such as a unique identifier, creator, or content.

 They are still digital assets with monetary value in which one can invest and expect to gain value. 

However, their use is not limited to the investment sector, quite the contrary. They have applications in the arts, gaming, and many other areas.

What does a crypto-currency look like?

The people who produce crypto-currencies are called miners. They are even said to mine crypto-currencies. Miners are an important part of this process.

 Without them, the blockchain would be frozen. The miner validates the transactions that take place on the blockchain.

For example, let's say I give you 3 bitcoins. The transaction is immediately sent through a network of peer-to-peer computers called nodes.

 However, the transaction is only verified after a certain amount of time by the computers that are part of the network, using algorithms specific to the blockchain.

 Once the transaction is verified, a new block of data is created for the ledger. It is added to the other blocks of the existing blockchain in a persistent and immutable way.

Behind these networked computers are miners who verify transactions. 

To verify a transaction, a miner must find the product of a cryptographic function that relates the new block to its predecessor. 

This procedure is called proof of work. They are rewarded for their services (and the computing power required to perform them) in the form of tokens.

How are crypto-currencies mined?

To mine cryptocurrency, one usually only needs to install software on their computer that uses a processor or a graphics card, or both, to solve a cryptographic problem, which requires a good amount of computing power to obtain new units of the cryptocurrency in question.

It should be noted, however, that large crypto-currencies are already too difficult to mine on their own. 

The mining of many of these currencies has become highly professionalized, and some of them are mined on farms, i.e. in buildings of several thousand square meters where tens of thousands of crypto-currency mining servers (Bitcoin, Litecoin, etc.) work day and night.

 China used to be a leader in cryptocurrency mining, but this industry no longer exists in the Middle Kingdom because the Chinese state has banned the mining or use of crypto-currencies. 

For example, in September 2019, 76% of the energy consumed for bitcoin mining worldwide came from Chinese miners of the virtual currency, a share that has since fallen to 0. In contrast, the U.S. share rose from 4% in September 2019 to 35% in August 2021.

 Another beneficiary of China's withdrawal from this sector is Kazakhstan, whose share of bitcoin mining was 1.4% in September 2019 and will rise to 35% in August 2021.

Faced with this competition from farms, cloud mining solutions have emerged. There is no need to invest in specific hardware. 

You just need to contact the company that has invested in the necessary equipment and "rent" its computing power. But beware, there are many scammers!

Which cryptocurrency should I mine?

Naturally, individuals want to mine the most profitable virtual currencies, such as Bitcoin, but also Dash, Ethereum, Monero, Litecoin, etc.

However, today it is very difficult to make money mining a cryptocurrency. It is often much more interesting to invest in virtual currencies in hopes of making a profit.

Cryptocurrency miner/developer: How can I start investing in cryptocurrency?

The job of a cryptocurrency miner is to confirm transactions that have taken place. He is then paid with tokens of the cryptocurrency for which he has confirmed a new block.

However, the role of the developer is very different. A cryptocurrency developer develops the computer protocol on which the cryptocurrency is based and which determines, among other things, the number of tokens in circulation, their speed of circulation, their storage capacity, etc. It is the architect, so to speak. It is, so to speak, the architect of the network.

Bitcoin, Ethereum: the most important cryptocurrencies.

How many cryptocurrencies are there? This frequent question seems simple, but in reality, it is very difficult to determine the exact number of virtual currencies. There is no website that lists them all.

The Ministry of Economy and Finance counted more than 2,871 in 2019, with no updates since then. 

There are currently over 9,500 cryptocurrencies on coinmarketcap. But in the end, this is not the most interesting part.

There are a large number of cryptocurrencies, but only a few dozen can be called popular cryptocurrencies. 

People often tend to categorize promising cryptocurrencies by their market capitalization, and rightly so.

The cryptocurrency Bitcoin, created in 2008 by Satoshi Nakamoto (it's unclear who he is, a man or a woman, one person or many), is the first of the cryptocurrencies. 

It is the digital gold standard of the cryptocurrency industry, in a sense, the industry benchmark. The leading cryptocurrency suffered a "crossroads" in August 2017. 

A disagreement within the Bitcoin community over the speed of transactions led to the emergence of a new coin: Bitcoin Cash, which immediately took third place in the top 10 cryptocurrencies and has since remained around the top 10 virtual currencies, but never competed with Bitcoin.

It should be remembered that the price of Bitcoin is only partially correlated to the state of the global economy and is more of a momentum effect, while most other virtual currencies are themselves correlated to the price of the leading cryptocurrency. 

However, this is less and less the case, and challengers are making impressive progress, particularly Ethereum.

In fact, the other leading cryptocurrency is Ethereum, which also underwent a 'fork in the road' in the summer of 2016. 

Ethereum is more comprehensive than bitcoin and takes advantage of all the applications of the blockchain, as it can handle not only transactions but also contracts and complex programs. 

Ethereum is technically more mature and powerful than bitcoin. It is both a decentralized exchange protocol that allows users to create smart contracts and a cryptocurrency based on the Ethereum network, commonly known as Ether. 

The strengths of this cryptocurrency network have contributed to Ethereum's dramatic rise since 2020. The second-largest active cryptocurrency could be aiming for the top step of the winners' podium. 

As of March 22, 2022, its market capitalization was about 362.348 billion, and it has grown nearly 80% in the past year. If this trend continues, it could overtake bitcoin, which has fallen by about -21% over the same period.

Bitcoin and Ether together account for nearly 61% of the total cryptocurrency market capitalization. Bitcoin dominates with 42% and Ether with 19%.

Ripple, Binance Coin, Dogecoin: the average cryptocurrency.

However, there are many other virtual currencies. The average cryptocurrency, which represents 0.8-2% of the total capitalization of all cryptocurrencies, includes for example Ripple, which is not only a crypto-currency (XRP) but also a transfer system that works independently of the XRP token.

 It is primarily a digital payment protocol designed to facilitate payments between banks. Binance Coin, Dogecoin, Litecoin, Cardano, NEM, Monero, Stellar or Iota, or Solana are also cryptocurrencies that regularly appear in the top 10 cryptocurrencies.

Small cryptocurrencies and shit currency

Small cryptocurrencies, which represent less than 0.8% of the total cryptocurrency capitalization, still account for almost 15% of the total cryptocurrency market as a whole.

 Investing in very small cryptocurrencies deserves caution. While it is every investor's dream to invest in the next Bitcoin at an early stage, most small cryptocurrencies remain so. 

Since the introduction of Bitcoin by Satoshi Nakamoto, almost 20,000 cryptocurrencies have been created, of which about 10,000 still exist today. 

Among them, there is a not insignificant proportion of cryptocurrencies that have no real history and therefore will never increase in value. These are called shits. 

This rather crude and essentially pejorative term refers to crypto-assets with no clear purpose, very low capitalization, and no prospect of real appreciation in value. 

They can proliferate during boom phases of the cryptocurrency market and tend to disappear when the market crashes and starts to decline. 

Therefore, it is always best to check before investing in a token whether it has real growth prospects, what project is behind it, and how serious the roadmap is.

There are many cryptocurrencies and new ones may emerge that challenge the big players in the industry, but it is also possible that disagreements within the community could lead to a "fork", i.e. a split within the community and the creation of a new currency based on the old technology but with changes.