What are Cryptocurrencies?
Cryptocurrency is just like the normal currency that we use. But they are digital in nature. You can use them for buying goods and services. They make use of cryptography so that your transaction remains secure.
Let us find out what is cryptocurrency and cryptocurrency information, you would like to be aware of. This guide to cryptocurrency should help you to understand the finer aspects of the same.
This new currency is here to stay. Let us find out more about it under the following sub-topics, namely,
What is crypto currency? Also known as crypto cash, it is a form of payment that you can use online in exchange for services or goods. You will come across many such companies that provide their own currencies. These are called tokens. If you happen to buy any goods from that company, you can use these tokens in exchange for the same.
They make use of blockchain technology. It is a decentralized technology that records transactions that take place. Many computers are involved in these transactions that manage them.
As far as the number of cryptocurrencies available, you will find that more than 6700 various cryptocurrencies are publicly traded according to CoinMarketCap.com. This is basically a website that deals with market research.
They raise funds through ICOs or Initial Coin Offerings. As of September 2020, the total value of bitcoins exceeded $370 billion. The most popular among all of them was pegged at $210 billion. This was stated again by CoinMarketCap.com.
This can be better understood with the help of the table below-
|$4.9 billion||Bitcoin Cash|
|$3.5 billion||Binance Coin|
|$3.4 billion||Crypto.com Coin|
How to Buy Cryptocurrency- Cryptocurrency Investing
Bitcoin and some cryptocurrencies can be bought with US dollars but most of them require that you buy them with bitcoin or any other type.
If you are planning to buy cryptocurrencies, you must have a “wallet”, which is an online app that will “hold” the currency. You have to open an account on the exchange where you transfer real money. With this real money, you can purchase cryptocurrencies like bitcoin or tether, or any other type you prefer.
One of the popular cryptocurrency trading exchange is Coinbase. Here you will be able to sell, buy, and exchange after creating a wallet.
Getting into Cryptocurrency
Prior to getting into cryptocurrency deals, you must find out whether or not it is legal in that country. Remember, they are not insured by the government in the United States as you would expect the other bank deposits to be. For instance, if you have your money parked in a bank account, you know the money is safe.
However, possessing bitcoins or cryptocurrencies means you have them in an online wallet that might be provided by a company. In the event, the company gets out of business or the company’s server and the website is hacked, you might lose the money. If you do so, your cash will not be protected by the government.
Another important aspect that you must keep in mind is that the value of cryptocurrencies keep on changing, in fact, even by the hour.
So, if you have invested a few dollars in the cryptocurrency with the hope that you will earn some profit, you may lose out on money overnight.
Few risks associated with them are-
- There is no guarantee that you will earn a profit
- No two cryptocurrency will have the same value
- There may not be legal protection for the investments you make
These days, you will come across news that will provide several such instances where people have been hoodwinked. Watch out for these red flags-
- If someone promises you excellent returns
- Assures you of big payouts
- Assures you that the returns will be in dollars or any other popular cryptocurrency
- Provides terms and conditions related to the confusing investment
In a nutshell, if you are interested in investing in cryptocurrency, read between the lines. Do your bit of homework before you dive-in.