Bitcoin, Ethereum, and other cryptos are revolutionizing how we invest, bank, and use money. Read this beginner’s guide to learn more.
A brief history
At its core, cryptocurrency is typically decentralized digital money designed to be used over the internet.
Its founder goes my name of Satoshi Nakamoto, mysteriously disappeared after release the Bitcoin Peer2peer electronic cash whitepaper.
Bitcoin, which launched in 2008, was the first cryptocurrency, and it remains by far the biggest, most influential, and best-known.
In the decade since, Bitcoin and other cryptocurrencies like Ethereum have grown as digital alternatives to money issued by governments.
What is cryptocurrency?
Popular cryptocurrencies, by market capitalization, are Bitcoin, Ethereum, Bitcoin Cash and Litecoin.
- There are cryptocurrencies similar to Bitcoin. Others are based on different technologies, or have new features that allow them to do more than transfer value.
Cryptocurrency makes it possible to transfer value online without the need for a middleman like a bank or payment processor, allowing value to transfer globally, near-instantly, 24/7, for low fees.
They’re managed by peer-to-peer networks of computers running free, open-source software. Generally, anyone who wants to participate is able to.
How is crypto secure? If a bank or government isn’t involved, It’s secure because all transactions are vetted by a technology called a blockchain.
A cryptocurrency blockchain is similar to a bank’s balance sheet or ledger. Each currency has its own blockchain, which is an ongoing, constantly re-verified record of every single transaction ever made using that currency.
The most important feature, cryptocurrencies allow individuals to take complete control over their assets
What Can You Do With Cryptocurrency?
<> Make low-cost international transfers
- Cryptocurrencies are one of the cheapest ways to send money internationally. Direct (P2P) crypto transactions eliminate third parties like banks or other transfer service providers that charge high fees. Crypto transactions are much faster without intermediaries as well.
- Cryptocurrencies are volatile assets. Their prices are highly driven by market sentiments and fluctuate more compared to stocks, bonds, or commodities. This allows opportunities to generate bigger gains by trading.
<> Store funds free from financial censorship
- Cryptocurrencies give freedom from financial repression, be it governmental or household. They rely on a decentralized blockchain and only the private key holder has access to their cryptocurrency wallets.
<> Stake for rewards
- Besides simply holding their digital currency, crypto holders may now employ them. This method, called staking or yield farming, allows you to earn interest for locking your coins for an agreed period of time.
Four tips to invest in cryptocurrency safely
According to Consumer Reports, all investments carry risk, but some experts consider cryptocurrency to be one of the riskier investment choices out there.
If you are planning to invest in cryptocurrencies, these tips can help you make educated choices.
- Research exchanges:
Before you invest, learn about cryptocurrency exchanges. It’s estimated that there are over 500 exchanges to choose from. Do your research, read reviews, and talk with more experienced investors before moving forward.
2. Know how to store your digital currency:
If you buy cryptocurrency, you have to store it. You can keep it on an exchange or in a digital wallet. While there are different kinds of wallets, each has its benefits, technical requirements, and security. As with exchanges, you should investigate your storage choices before investing.
3. Diversify your investments:
Diversification is key to any good investment strategy, and this holds true when you are investing in cryptocurrency. Don’t put all your money in Bitcoin, for example, just because that’s the name you know. There are thousands of options, and it’s better to spread your investment across several currencies.
4. Prepare for volatility:
The cryptocurrency market is highly volatile, so be prepared for ups and downs. You will see dramatic swings in prices. If your investment portfolio or mental wellbeing can’t handle that, cryptocurrency might not be a wise choice for you.