The advent of the internet opened many possibilities that allow the constant advancement of technology. One of the many breakthroughs that resulted from this is the development of cryptocurrency, an asset which changed the game for investors all over the world.
What is Cryptocurrency?
Cryptocurrency is a digital asset which is used as money on the internet. It is decentralized through networks based on blockchain technology, a distributed ledger across a large number of computers, to make it work across numerous digital transactions. Moreover, it is secured by cryptography, which, just like tangible money, makes them difficult to counterfeit.
Being underpinned by cryptographic systems, cryptocurrencies allow secure online payments without the assistance of third-party intermediaries. They can even be mined or purchased from online cryptocurrency exchanges safely through the encryption algorithms that safeguard them.
The Cryptocurrency Market
The global acceptance of cryptocurrency has caused an increase in its market value all over the world. In fact, the global cryptocurrency market reached $1,782 billion in market value in 2021, and is expected to reach $32,420 billion by 2027, with a compound annual growth rate of 58.4% from 2022.
In the UAE, the government is now bound to issue federal licenses for virtual asset providers by the end of the first quarter of 2022, attracting some of the world’s biggest cryptocurrency companies and digital asset investors. Currently being the third largest crypto market in the Middle East with a transaction volume of about $26 billion, the country expects to have more than 1,000 crypto businesses in Dubai alone through this initiative, giving rise to various digital investment trends.
Types of Cryptocurrencies
Being the first cryptocurrency introduced in the market in 2009, Bitcoin established the fundamental system of cryptography which now serves as the foundation of most cryptocurrencies — blockchain technology. This works by verifying blocks of transactions using powerful computers that would generate more bitcoins, a process known as proof-of-work (PoW), which permanently logs transactions on the blockchain to ensure the security of each bitcoin.
Now the most valuable and popular cryptocurrency, Bitcoin is used today as a mode of payment by over 2,300 businesses in the US alone. With this, experts predict that by the second quarter of 2022, Bitcoin could reach $200,000 in value, 462% more than its value in February 2022, making it an attractive market to invest in.
Just like Bitcoin, Ethereum is founded on a blockchain network. However, it was designed as a programmable one, allowing its users to create, monetize, and use applications, rather than support a currency. As of September 2021, this became the second most popular digital asset next to Bitcoin, but unlike Bitcoin, Ethereum has no limit as to the number of Ethers that can be created.
Since its inception in 2015 where it was priced at $0.311, Ethereum has seen tremendous growth. Due to its growing popularity, its price reached $4,800 in 2021 and is expected to increase by up to 400% in 2022. It also projected an ROI of nearly 300%, showing how investors have nearly quadrupled their investment.
3. Cardano (ADA)
Cardano promotes itself as the next-level player, using third-generation blockchain and proof-of-stake (PoS) to eliminate the need for complicated PoW computations and the high electricity consumption related to it, potentially making its network more efficient and sustainable. It specializes in traceability and identity management, allowing it to streamline the collection of data from multiple sources and prevent fraud by auditing a product’s manufacturing pathway.
In 2021, the price of Cardano ADA reached almost $3, before briefly slipping below $1 at the start of 2022. Despite this, many experts predict that its price will rise to $5 in the next five years, with the potential to reach $10 if it eventually gains mainstream adoption.
4. Binance Coin (BNB)
BNB is a cryptocurrency token created by the world’s biggest cryptocurrency exchanges, Binance, for it to use as a medium of exchange in its transactions. Today, it is now widely used for payments, entertainment, and other online services, and is even predicted to reach the price of $498 in 2022, with an expected maximum increase of up to $547 by November.
If you are looking to become a digital asset investor, reach out to AIX Investment, a financial investment firm, to guide you through.