Cryptocurrency is a digital currency based on cryptography for the purpose of enhancing the security of that currency. Cryptocurrency is a digital form of money that we can use every day as a means of exchanging services and goods. Basically, these are the ones and zeros circulating on the Internet, they are electrons passing through cables or captured on hard drives of servers around the world. So where does their value come from and what do they offer us? To answer these seemingly simple questions, we must first take a look at the current currency system, the so-called "fiat" money, and compare it with the relatively new idea of cryptocurrency.
Fiat currencies such as the dollar, euro, etc. are now considered a universal currency controlled by the central bank. They are not covered in assets or precious metals, which means that the central bank can put new coins into circulation at any time. Mainly to pay for government spending or stimulate the economy. This means, among other things, that current currencies are essentially useless and we have an infinite number of them at our disposal. The reason they are valuable to us is simple. The word “fiat” comes from the Latin language and literally means “let it happen”, but in connection with money it is more often understood as “an order, permission, in particular from the government, that money becomes legal tender”.
This invention has contributed to the explosive growth of the world economy in recent decades. We are "richer" than ever before.
Recently, however, the benefits of paper money have begun to wane, and issues have come to the fore, from inflation to the fact that all "modern" countries are in debt. Cryptocurrency is, as mentioned, a digital currency. The main feature of the "correct" cryptocurrency is that it basically does not belong to anyone. Its value is determined by the market. The key word is "decentralization". The concept of a decentralized cryptocurrency was first implemented by a person (probably a group of people) named Satoshi Nakamoto. On January 3, 2009, this group formed the first Bitcoin block. A software technology called Blockchain created the first digital currency. From this moment on, no one, not even the creators themselves, can influence the currency, falsify, control or cause inflation.
Today there are a great many different cryptocurrencies. There are many ways to increase your savings using digital assets, including investing in cryptocurrency. This is what we will talk about today and consider one of the interesting and mysterious cryptocurrencies - Aave.
Aave - what is it? Aave story
Aave is a decentralized platform based on the Ethereum blockchain. The founder and CEO of Aave is Stani Kulchov. While Stani has always had a passion for finance, his career actually began in the field of law. He was pursuing an LLM from the University of Helsinki when he discovered Ethereum and became a member of the community. As Kulchov learned more about the technology behind Ethereum, he began to think about various ways to use the transparency and immutability it provides to create a fairer and more efficient financial system. This is how the idea for Aave was born.
Initially, the project was launched in close connection with the Ethereum network. The name also referred to it because in 2017 it was ETHLend. The ICO was not phenomenal for the cryptocurrency market as it received "only" $ 600,000 from investors, which allowed it to launch the DeFi (decentralized finance) project.
Three years later, the token became independentы and changed its name from Lend to Aave. There was also a denomination, because there are 100 times less new chips than their ancestors. However, the token is still based on Ethereo in the ERC20 standard.
Aave - as one of Defi's most popular hits
You can make money by placing cryptocurrency in interest-bearing accounts. And although there are quite a few blockchain projects in the world, this one is gaining more and more enthusiasts. Why? An important element is undoubtedly the possibility of choosing a fixed and variable interest rate. However, the main thing is the so-called quick loans, which allow you to get up to millions of dollars. As a result, Aave quickly outpaces the competition.
The main attraction function in Aave is the so-called Flash credits. It is literally an immediate loan because the cryptocurrency is transferred immediately.
We also don't need to fill out complicated bank forms, confirm earnings or our credit history. The loan is received by everyone, regardless of the purpose for which they want to use it. Where is the catch? In the security of the blockchain. It must be immediately secured by paying for the same transaction on the Ethereum blockchain. Therefore, these are most often loans, but arbitrage transactions, thanks to which you can earn on exchange rate differences.
An interesting option for Aave is also the choice of the shape of interest. Everyone decides for himself whether the interest rate should be fixed or variable. Thus, you can significantly increase or decrease your costs depending on the accuracy of your decisions. In addition, the interest rate on the loan may change during the period of its validity. This is especially important during large price fluctuations in the cryptocurrency market. Initially, the floating interest rate is lower, but if another price rally begins, which is not uncommon in the crypto market, it is worth switching to a fixed interest rate, since interest rates are rising by leaps and bounds.
Factors affecting the price of AAVE
Virtual currencies are not administered by any central bank. Thus, the value of AAVE Token is not determined by the decision of the central banks, but by several different factors. However, the price of virtual currencies is also influenced by events in the real economy, as they represent a special class of assets that in the eyes of investors represents competition for traditional investments in bonds, stocks or commodities.
- Supply and demand. The market mechanism is the main force behind the price of Aave. In general, cryptocurrencies are a deflationary asset, investors use this currency as a protection against inflation. Basically, this means that at a time when the economy is worried about possible severe inflation, one way to counter the threat of asset degradation is to invest in cryptocurrencies.
If the price of fiat currency falls, then the price of Aave will rise given that currency. This is due to the fact that at a lower dollar value, the investor will receive more Aave cryptocurrency.
- Market volatility. Market volatility is a strong factor in the price of Aave. For many, volatility and the cryptocurrency market are an inseparable pair. Some traders have learned to use this to their advantage, some even deliberately provoke it with their behavior. However, in general, volatility slows down and limits the growth rate of the cryptocurrency market.
Should traders invest in Aave?
It is easy to invest in Aave in Kenya knowing the benefits of the coin:
- Availability - anyone can buy Aave in Kenya at any time!
- Reliability. It is impossible to forge or carry out other similar operations with Aave, it is well protected.
- Deflationary nature - most countries have the right to issue new money. As the amount of money in circulation increases, the currency depreciates (inflation). In the case of Aave, the total amount in circulation is final and known in advance.
- Ease of payment. Payments are faster than bank transfers! The minimum commission for the transfer or its absence. Compared to paper money transfers, Aave transfer fees are usually very low.
- High level of transparency and flexibility for the user.
How to invest in Aave in Kenya?
Investing in cryptocurrencies is more of a speculation than a standard investment. You can invest in Aave in Kenya using an investment platform or cryptocurrency exchange.
Use the exchange to buy Aave. When a trader buys Aave in the stock market, he is buying real coins. To trade on an exchange, you need to have an exchange account that matches the size of the transactions. The wallet is used to store Aave on the stock exchange, which a trader can use when he wants to sell his coins. A trader needs to understand how stock exchanges work and what skills are needed when trading cryptocurrencies on an exchange. There are certain restrictions that exchanges impose on traders, such as the size of the deposit on these accounts.
Trade Aave with CFDs (Contract for Difference). CFD trading involves a trader who buys based on the market share of the cryptocurrency. These trades allow traders to execute trades without having cryptocurrency. If the trader is confident that the market will go up, he will make a purchase. When a trader thinks that the price of a cryptocurrency will fall, he sells the currency on the platform. Traders use leverage when using CFD trading style to execute their trade. Trading CFDs allows you to close trades without risking the price of the cryptocurrency. Leverage is when a trader puts a small amount of money into a trade using margin. However, traders receive money from trades based on the actual amount of the currency, so leverage increases the amount of money gained or lost while trading.
Digital currencies are of interest to investors and are also used in regular or small transactions and have many advantages. Do you still find investing in cryptocurrency difficult? We hasten to assure you that this is not the case. Today, there are so many opportunities to harness the potential of the fast-growing cryptocurrency industry for absolutely everyone! Join users who invest easily, clearly and securely in proven best cryptocurrencies! Sign up to the best trading platforms, create an account in a few clicks, invest and start harnessing the potential of cryptocurrencies today!