More than 20 million people already invest in cryptocurrencies in Latin America, the information is from a recent FinDocs study.
After all, what are cryptocurrencies?
According to expert Andrey Nousi, CFA and founder of Nousi Finance, “Cryptocurrency is a 100% digital asset, which does not depend on financial institutions to be negotiated, registered and stored by the users themselves, and which has cryptography as a security feature”.
Nousi explains that assets solve numerous problems of the current traditional financial system.
“When you make a payment, there are several brokers involved in this transaction and each of them charges a fee, such as credit card companies that charge between 2 and 3% of the cost of the transaction. This is quite expensive for merchants. With cryptocurrencies you eliminate intermediaries and transactions between countries are instantaneous, without the need to ask for someone’s approval to do so”, explains the expert.
In the cryptocurrency market, despite calling many assets cryptocurrencies, most of them are actually tokens.
“While a cryptocurrency has its own network, on which transactions are recorded and stored, a token consists of code embedded in a network, which has the cryptocurrency as its main asset to pay transaction fees.Nousi says.
How to acquire?
There are different ways in which you can acquire cryptocurrencies, according to Nousi, at first they are mined existing cryptocurrencies and can also be mined by network users who record and/or store network data.
“In the case of bitcoin, this process, followed by the resolution of a mathematical proof by computers, is called ‘mining’ and, for each block that has its mathematical problem solved, today 6.25 new bitcoins are ‘created’”, says Nousi. .
cryptocurrencies too can be bought and sold in exchange houses (exchanges) centralized or decentralized. Another way to acquire assets is through exchange-traded funds or ETFs.
How can I keep them?
You can store your digital currencies in 3 ways, the first is Hot Wallet, a 100% digital wallet, connected to the internet and with software on your device; the second is Cold Wallet, a physical wallet, made up of hardware and embedded software. With it, private keys can be stored on a device without a direct connection to the Internet.
The third are the exchanges, in this case, all the security of your crypto assets will depend on the security of the exchange, internally and externally.
Why are cryptocurrencies so volatile?
Nousi explains that because the cryptocurrency market is new, it is difficult to be precise about the price of the assets.
“The market capitalization of most cryptocurrencies is still small. This means that players who occupy large positions exert relevant pressure, both as buyers and sellers, when it comes to operating with their funds. That volatility implies an excess of opportunitiesNousi says.
To learn how to analyze the crypto landscape, Nousi recommends the most used models such as “Technical analysis”, “Fundamentalist Analysis”, “Sentiment Analysis” Y “On-chain analysis”.
What are the pricing models?
The main model is the stock-to-flow, popularly known as “S2F”. It seeks to set the price of the asset by relating its supply and demand. With the increasing demand, the model presents a “infinity maximum”, with longer periods of appreciation after the events called “halving”.
Another model that can be considered more dynamic is the “Bitcoin NVT Price” either “Bitcoin network value for the transactionWith the change in the volume traded on the Bitcoin network and its total market value, the NVT pricing model is constantly updated.
Disclaimer: The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information set forth herein should not be taken as financial advice or investment recommendation. All investment and commercial movement involve risks and it is the responsibility of each person to do their due research before making an investment decision.
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Investments in crypto assets are not regulated. They may not be suitable for retail investors and the full amount invested may be lost. The services or products offered are not aimed at or accessible to investors in Spain.