You’ve probably heard of cryptocurrencies if you don’t live on Mars. While most people think of Bitcoin when they think of cryptocurrencies, there are actually many different types of cryptocurrencies. In this article, we’ll briefly introduce cryptocurrency, how it works, and things to consider before investing in cryptocurrencies. We’ll also tell you about cryptocurrency regulations in the Philippines, the advantages and risks of investing in crypto, and our top picks for the best cryptocurrencies to buy in the Philippines.
What is Cryptocurrency?
A cryptocurrency is a digital or virtual asset that uses cryptography to secure its transactions and control the creation of new currency units. Cryptocurrencies are decentralized, meaning they are not subject to government or financial institution control. Bitcoin, the first and most well-known cryptocurrency, was created in 2009. In simple terms, crypto is digital money.
How Do Cryptocurrencies Work?
Cryptocurrencies work on a technology called the blockchain. A blockchain is a digital ledger of all cryptocurrency transactions. It is constantly growing as “completed” blocks are added to it with a new set of recordings. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data. Bitcoin nodes use the blockchain to differentiate legitimate Bitcoin transactions from attempts to re-spend coins that have already been spent elsewhere.
How Does The Blockchain Work?
Blockchain technology was first outlined in 1991 by Stuart Haber and W. Scott Stornetta, two researchers who wanted to create a system where document timestamps could not be tampered with. But it wasn’t until 2009 that someone (or a group of people) going by the name Satoshi Nakamoto implemented blockchain technology as we know it today, laying the foundation for Bitcoin.
Another way to think of the blockchain is as a digital ledger. This ledger contains every transaction made in the cryptocurrency and is constantly updated as new transactions are made.
Each transaction is verified by multiple computers worldwide (these computers are called “nodes”), and each node gets a copy of the blockchain. This way, there is no one central authority that can tamper with the transaction data.
5 Things to Consider Before Investing in Cryptocurrencies
Before you invest in cryptocurrencies, there are a few things you should consider:
1. The Utility
The first thing you should ask yourself is, “what is this cryptocurrency actually used for?” Does it have a real-world use case? Is it trying to solve a problem? If the answer is no, then you should be wary of investing in that particular cryptocurrency. The truth is that most cryptocurrencies are not actually used for anything. They are simply speculative investments, and most of them will never be used for anything other than speculation. To make the best investment decision, you should only invest in cryptocurrencies with real-world use cases.
2. The Team
Another important thing to consider is the team behind the cryptocurrency. Do they have a good track record? Are they experienced and reputable? This is important because the team will be the ones responsible for developing and growing the cryptocurrency. If the team is not experienced or reputable, there is a good chance that the cryptocurrency will not succeed.
3. The Technology
The technology behind cryptocurrency is also important to consider. Is the technology sound and well-developed? Does it have the potential to be scaled up? These are important questions to ask because the success of a cryptocurrency will largely depend on its technology. For example, Bitcoin’s success is partly due to its blockchain technology, which is now being used by many other cryptocurrencies.
4. The Community
Another thing to consider is the community behind a cryptocurrency. Is the community active and supportive? Do they believe in the project? This is important because the community will play a big role in promoting and growing cryptocurrency. If there is no active and supportive community, it is very unlikely that the cryptocurrency will succeed.
5. The Potential
Finally, you should also consider the potential of cryptocurrency. Does it have the potential to grow in value? Is there a good reason to believe it will be adopted by more people in the future? These are important questions to ask because the success of a cryptocurrency will largely depend on its potential. For example, Bitcoin has a lot of potential because it is the first and most well-known cryptocurrency. Ethereum also has a lot of potential because it is the second most well-known cryptocurrency and has a very active and supportive community.
Cryptocurrency Regulations in the Philippines
The Philippines has been relatively friendly towards cryptocurrencies. It is now estimated that over a 4.3million people in the Philippines own crypto. Bangko Sentral ng Pilipinas (BSP) regulates crypto in the Philippines and has been outspoken in its support of blockchain technology. BSP has even released a circular outlining the guidelines for cryptocurrency exchanges operating in the country. The Philippines government has also taken the initiative to boost cryptocurrencies. They have signed an agreement with the Union Bank to develop the Blockchain software bonds. In Makati (Metro Manila), Unionbank has also installed a Bitcoin ATM, demonstrating how cryptocurrencies are increasingly becoming popular nationwide.
Advantages of Investing in Crypto
There are many advantages to investing in cryptocurrencies, including:
1. They have the potential to appreciate in value
This is perhaps the most obvious advantage of investing in cryptocurrencies. Just like any other asset, they have the potential to increase in value over time. This makes them a great long-term investment. However, it is important to remember that they also have the potential to decrease in value.
2. They are easy to trade
Cryptocurrencies are very easy to trade. This is because many online exchanges allow you to buy and sell cryptocurrencies. You can also use these exchanges to trade other assets, such as stocks, bonds, and commodities. This makes them a great investment for people who want to diversify their portfolios.
3. They offer a high degree of anonymity
Another advantage of investing in cryptocurrencies is that they offer a high degree of anonymity. This is because transactions are typically done using pseudonyms instead of real names. This makes them a great investment for people who value privacy.
4. They are global
Cryptocurrencies are a global phenomenon. This means that they are not subject to the same regulations as other assets, such as stocks and bonds. This makes them a great investment for people who want to invest in assets that governments do not regulate.
Risks of Investing in Crypto
While there are many advantages to investing in cryptocurrencies, there are also some risks. These risks include:
1. They are volatile
Cryptocurrencies are very volatile, which means that their prices can fluctuate greatly. This is because they are not backed by any asset, such as a stock or a commodity. This makes them a riskier investment than other assets.
2. They are not Highly regulated
Another risk of investing in cryptocurrencies is that governments do not regulate them well. This makes them a riskier investment than other assets, such as stocks and bonds.
3. They are a new technology
Cryptocurrencies are a new technology, which means that there is still a lot of uncertainty about their future. This makes them a riskier investment than other assets, such as stocks and bonds.
Best Cryptocurrencies to Buy in the Philippines
1. Bitcoin
Bitcoin is the largest and most well-known cryptocurrency. It was created in 2009 by an anonymous person or group of people under the name Satoshi Nakamoto. Over the years, Bitcoin has become the most popular cryptocurrency, with millions of people worldwide using it.
2. Ethereum
Ethereum is the second largest cryptocurrency. It was created in 2015 by Vitalik Buterin. Ethereum is a decentralized platform that runs smart contracts. These contracts are programs that run on the Ethereum network and can be used to create decentralized applications. Ethereum is a great investment for people who want to invest in new and innovative technologies.
3. Binance Coin
BNB is the native cryptocurrency of the Binance Exchange. It was created in 2017 by Changpeng Zhao. Binance is a cryptocurrency exchange that allows users to trade cryptocurrencies. BNB is used to pay fees on the Binance exchange. Binance Coin is a great investment for people who want to use the Binance exchange.
How to Buy Cryptocurrencies
There are three main ways to buy crypto;
1. Through Crypto Exchanges
Crypto exchanges are online platforms that allow you to buy and sell cryptocurrencies. The most popular crypto exchanges are Binance, Coinbase, and Kraken.
Crypto exchanges work by matching buyers and sellers. An exchange allows you to convert fiat currency to crypto or vice versa. When you want to buy crypto on an exchange, you must create an account and deposit fiat currency into the account. Once the money is in your account, you can use it to buy cryptocurrencies.
2. Peer-to-Peer
Peer-to-peer platforms are online platforms that allow you to buy and sell cryptocurrencies directly from other people. The most popular peer-to-peer platform is LocalBitcoins. Peer-to-peer platforms work by matching buyers and sellers. You can use these platforms to find people who are willing to sell you cryptocurrencies. You can also use these platforms to find people who are willing to buy cryptocurrencies from you.
3. Through Crypto Brokers
Crypto brokers are online platforms that allow you to buy cryptocurrencies. Crypto brokers work by allowing you to buy crypto from them. When you want to buy crypto from a broker, you must deposit money into your account with the broker. The broker will then use this money to buy the crypto. On brokerage platforms, cryptocurrencies are traded in pairs.
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