Home Technology Is the Crypto Crash Permanent or Just a Crypto Winter?

Is the Crypto Crash Permanent or Just a Crypto Winter?

Is the Crypto Crash Permanent or Just a Crypto Winter?

Cryptocurrency is part of an exciting wave of technology, but is it here to stay? With Bitcoin now over a decade old, cryptocurrency isn’t quite a new phenomenon. However, many people did not take notice of Bitcoin, Dogecoin, and other cryptocurrencies until their values ​​began to skyrocket during the COVID-19 pandemic.

But in the months that followed, prices are far from their peaks. Here’s an overview of what cryptocurrencies are, what happened, and what the future may hold for crypto.

What is Crypto?

Cryptocurrency is a type of digital currency that exists entirely online. Cryptocurrencies are created by volunteer developers, business owners, and others looking to use crypto for their business, investment, or others trying to make a quick buck.

Although prices change rapidly, these are the most valuable digital currencies to date:

  • Bitcoin
  • Ethereum
  • Attached
  • USD Coin
  • Binance Coin
  • XRP
  • gimbal
  • BinanceUSD
  • Solana
  • Spotted

Dogecoin, which became popular as the meme and favorite coin of Elon Musk during the height of COVID, ranks as the 11th largest digital currency. Certain currencies are required to perform certain transactions, such as sending crypto, NFTs, and performing smart contracts. Some are used as currency by certain games or online businesses. Others offer little use beyond association with a cute animal or a comically named project.

How Crypto 101 Works

Many of the biggest cryptocurrencies are run by communities of developers who work together to maintain and improve the currency’s database, known as the blockchain. Blockchain is an industry term for a distributed or decentralized public database used in the processing and tracking of cryptocurrency transactions.

Some currencies, such as Bitcoin and Ethereum, rely on their own blockchains and enable transactions. Others, like USD Coin, operate using other blockchains. Either way, every coin (currency that uses its own blockchain) and token (currency that uses another blockchain) is tracked from inception to current ownership using the blockchain’s database. .

Every coin, token, and other digital asset using blockchain ledgers must be assigned to an owner through a digital wallet address. Digital wallets are free to create online as a software wallet, or you can purchase a more secure hardware wallet.

When buying and selling crypto through a major exchange like Coinbase, the exchange manages the wallet details for you, so your experience is more like a stock exchange account. However, when someone else holds your crypto, the risk of loss is higher. Unlike traditional bank accounts and investment accounts, crypto is not insured by the FDIC, NCUA, or SIPC.

Anyone with an internet connection can send crypto to anyone else using a compatible digital wallet address. This is why many supporters are enthusiastic about cryptocurrency. It democratizes money in a way. Unlike fiat currencies (government-backed currencies), there is not necessarily a single entity in charge of a cryptocurrency. However, this also means that cryptocurrency is only worth what someone is willing to pay or the value it brings. Opponents say it is effectively zero.

There is no need for a bank, government, brokerage, etc. where there is a decentralized public ledger. The system is maintained by a distributed network of computers called miners, which typically earn fees for successfully processing transactions.

The rise and fall of crypto during COVID-19

Bitcoin price chart from early 2017 to date. Find the latest price here.

The most valuable cryptocurrency is Bitcoin, with a current price of around $24,000 per coin and a market capitalization of around $500 billion. Early buyers made a fortune, as the coin was worth around $100 in 2013 and hit $1,000 in 2017. In late 2017, it hit around $20,000 before a long lull, sometimes referred to as “crypto winter,” leading to the COVID-19 pandemic.

The price increased at the end of 2020, well after the COVID experience. However, the currency also experienced high volatility and a huge drop from the current price level.

If you look at a recent chart, not everyone is a crypto skeptic. Bitcoin, Ethereum and others have recovered somewhat from recent lows. But only time will tell what happens next.

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Dot Com Bulle 2.0?

With many mixed opinions about cryptocurrency, it can be difficult to know what to do or how to understand the cryptocurrency landscape. While this analogy may eventually turn out to be wrong, the world of crypto is a lot like the booming online business world at the turn of the millennium.

After an apparent mania for investing in any stock related to a new invention called the internet, internet stock prices plummeted, coinciding with the recession of the early 2000s. Dozens of leading companies experienced major difficulties during this period. That is if they survived at all. Pets.com, 360networks, Boo.com, Egghead Software, eToys.com and Excite are just a few notable failures.

However, the period was not so bad for everyone. Household names like Amazon, eBay and Google have emerged as some of the most successful and valuable companies in the world (Q.ai also offers kits focused on big tech companies). While many cryptocurrencies are almost certain to follow Pets.com’s path, there’s a good chance that major successes will emerge from the cryptocurrency world.

Conclusion on the Crypto Collapse

The COVID crypto boom has made almost every investor aware of currencies like Shiba Inu, Litecoin, Avalanche, and Polygon. Much like the Dot Com crash, some cryptocurrencies may never recover. However, those who offer a useful service or work with specific companies can stay for the long haul. What this means for crypto prices in the meantime, however, is anyone’s guess.

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