In layman terms, Cryptocurrencies are digital forms of money that allow you to purchase goods and services, or trade them for profit without using a third party. You cant see, feel or touch them. Here we’ll be discussing more what cryptocurrency is, how to buy it and how to protect yourself.
What is cryptocurrency?
A cryptocurrency is a kind of payment that can be transacted online for goods and services. Many organisations have issued their own currencies, often known as tokens, and these can be exchanged specifically for the goods or services that the company provides. You’ll need to exchange real currency for cryptocurrency to access the goods or services.
Cryptocurrencies work using a technology called a blockchain. Blockchain is a decentralized technology spread across many computers that manage and records transactions, blockchain works like a ledger where each transaction are recorded. the most interesting part of this technology is its security.
How many cryptocurrencies are there?
At the time of writing this article, there are more than 11,900 different cryptocurrencies that are traded publicly, according to CoinMarketCap.com, a market research and valuation website.
And cryptocurrencies continue to increase, raising money through initial coin offerings, or ICOs. The total value of all cryptocurrencies on Sept. 17, 2021, was more than $2.1 trillion — down from the April high of $2.2 trillion, according to CoinMarketCap. The total value of all bitcoins, the most popular digital currency, was pegged at about $901 billion, regaining some ground from recent price lows. Still, the market value of bitcoin is down from the April high of $1.2 trillion.
Top cryptocurrencies by market capitalization
These are the 10 biggest trading cryptocurrencies by market capitalization by CoinMarketCap.
Are cryptocurrencies legal?
There’s no direct answer to this question. it all depends on where you are reading this post from. It’s legal in most countries like the United States, though China has essentially banned their use, and ultimately whether they’re legal depends on each individual country as I said earlier. A country like El Salvador has recently adopted Bitcoin as a legal tender and we believe other countries will follow suit.
Are cryptocurrencies a good investment?
Cryptocurrencies are a very volatile market, they may go up in value and also decrease in value, but many investors see them as mere gamblings, not authentic investments. What’s their reason? Just like real currencies, cryptocurrencies generate no cash flow, so for you to profit, someone has to pay more for the currency than you did.
In reality, the cryptocurrency market is generating lots of money, but to be part of this cash flow, knowledge is required. you need to know when to buy and when to sell the cryptocurrency you wish to invest in.
For those who see cryptocurrencies such as Bitcoin as the money of the future, it should be noted that a currency needs stability so that merchants and consumers can determine what a fair price is for goods.
Bitcoin and other cryptocurrencies have been volatile throughout much of their history. For example, while Bitcoin traded at about $63,000 in April 2021, its value then dropped to as low as $30,000 in June of the same year. This price volatility creates a problem.
How do I buy cryptocurrency?
While some cryptocurrencies, including Bitcoin, are available for purchase with U.S. dollars, others require that you pay with bitcoin or another cryptocurrency like USDT or BUSD.
To buy cryptocurrencies, you’ll need a “Crypto wallet,” an online app or website that can hold your currency. Generally, you create an account on an exchange, and then you can transfer real money to purchase cryptocurrencies such as Bitcoin or Ethereum.
How do I protect myself?
If you’re want to buy or invest in any cryptocurrency, read the whitepaper to know the company’s prospectus and also check for this informations:
Who owns the company? An identifiable and trusted owner is a positive sign.
Are other investors interested or who else is investing in it? It’s a good sign if other well-known investors want a piece of the currency.
Is the currency already developed, or is the company looking to raise money to develop it? The further along with the product, the less risky it is.
It can take a lot of work to comb through a plan; the more detail it has, the better your chances to know that it’s authentic. But even legitimacy doesn’t mean the currency will succeed. That’s an entirely separate question, and that requires a lot of market savvy.
Crypto Advice for a Total Newbie
- Use a trusted crypto wallet like Trustwallet or Meta Mask
- Make sure you don’t share sensitive information with untrusted people because hackers always try to hack crypto wallets through phishing websites, emails, fake airdrops etc.
- Also, make sure you are sure of the ICO projects you invest in because there are lots of ICOs (Initial Coin Offerings) out there.
- Study and understand how the crypto market works.
- Always do your research no matter who recommends any crypto project to you.
By now I believe you know a little about cryptocurrency than 90% of the world population. Crypto isn’t a get rich quick scheme, Invest only what you can afford to lose. Get a mentor or a coach so you don’t lose money unnecessarily. I wish you the best!