Cryptocurrencies are having a moment in the spotlight, and it’s easy to see why as they continue to gain popularity. But some of the buzz comes from misconceptions about what they are and how they work. Here are ten facts about the cryptocurrency market’s past, present, and future, and what you can do to make the most of your cryptocurrency investment!
1) The cryptocurrency market is still young
Cryptocurrency markets are still relatively new, with Bitcoin only being released in 2009. Despite this, they’ve experienced a rapid rise in popularity over the last few years. Bitcoin was worth less than $1 when it first came out but has since grown to be worth more than $6,000 as of October 2017. The total value of all cryptocurrencies combined is currently at around $122 billion US dollars as of October 3rd, 2017.
2) The majority of cryptocurrencies are traded on decentralized exchanges
The majority of cryptocurrencies are traded on decentralized exchanges. This means that users don’t have to rely on a central authority (ex: a bank) to hold funds or facilitate transactions. Instead, users trade cryptocurrencies peer-to-peer through digital wallets.
3) The total value of all cryptocurrencies is still relatively small
The total value of all cryptocurrencies is still relatively small. As of this writing, the combined value of all cryptocurrencies is $271 billion USD. This represents a little more than 1% of global GDP. Most people in developed nations have never heard of cryptocurrencies or have only a passing awareness. However, in developing economies, especially those with high rates of inflation or economic turmoil, Bitcoin has been a savior for many who have lost faith in their governments’ ability to provide for them.
4) The majority of Bitcoin trading is done in China
The majority of Bitcoin trading is done in China. The most popular exchanges are BTCChina and Huobi. Trading volume on Chinese exchanges may account for up to 90% of global trading. The price of Bitcoin has been highly volatile, and the country has seen it go from $1,000 per coin to over $2,000 in 2017. There have been periods when Chinese authorities have banned initial coin offerings (ICOs) or imposed strict regulations; however these restrictions appear to be lifted as of now.
5) Japan has been a leader in adopting cryptocurrencies
Japan has been a leader in adopting cryptocurrencies. After China announced that it would ban all cryptocurrency exchanges on September 4th, 2017, Japan became the world’s largest Bitcoin trading market, accounting for more than 50% of global Bitcoin trades. Japan is also the home to three of the six largest Bitcoin exchanges in the world. The United States is responsible for two of these exchanges (Coinbase and Bitstamp).
6) The South Korean government is supportive of cryptocurrencies
South Korea is one of the biggest markets for cryptocurrencies like bitcoin. The country has a history of embracing new technologies early on, so it makes sense that they’re supportive of this nascent technology. Recently, they’ve been looking to increase regulations in order to protect consumers against fraud and money laundering.
Cryptocurrencies are currently exempt from capital gains tax in South Korea.
7) Cryptocurrencies are often used for illegal activities
Cryptocurrencies are often used for illegal activities because of the lack of regulation and high volatility. Even though Bitcoin is not anonymous it does not provide any additional security. With a government-issued currency you know that if someone steals your bank card they can only spend what you have in your account. With cryptocurrencies there is no limit to how much someone can spend, which makes it an ideal currency for illegal activity such as money laundering or drug trafficking.
8) The cryptocurrency market is highly volatile
The cryptocurrency market is highly volatile with prices fluctuating wildly on a daily basis. Cryptocurrencies are also not immune to cyberattacks. For example, in January 2018 hackers stole $500 million worth of NEM from Japanese crypto exchange Coincheck.
9) There are many different types of cryptocurrencies
There are many different types of cryptocurrencies out there. Some are more popular than others. The top 10 by market capitalization are: Bitcoin, Ethereum, Ripple, Bitcoin Cash, EOS, Litecoin, Stellar Lumens, IOTA, Cardano and NEO. Bitcoin has had a tough year.
10) The future of the cryptocurrency market is uncertain
The crypto markets have been on a rollercoaster ride over the last few years. The volatility in these markets has been intense with Bitcoin going from $1,000 in 2013 to $19,000 in 2017 before dropping to $6,000 today. It’s hard to know what will happen next.
Possible catalysts for a bull run could be an institutional investor entering this space or a major geopolitical event that causes people to flock towards cryptocurrencies as a safe haven.