What is Cryptocurrency?
In this digital era, we have jumped from paper money to digital money, known as Cryptocurrency. Such currencies are not connected to anything valuable in the real world. It is a decentralized network that enables safe online transactions. Cryptocurrencies have risen to prominence as a new form of payment for a wide range of goods and services around the world. Especially in recent years, it has experienced massive growth. Let’s take a closer look at cryptocurrencies.
Working of Cryptocurrencies
Cryptocurrencies are powered by Blockchain technology. In simple words, It is a form of a digital ledger that verifies and stores accounts, transactions, and balance information. For the sake of protection, blockchain is not based in a central location. Instead, it is spread over multiple well-protected computing devices. Cryptocurrencies are famous for peer-to-peer transactions, meaning you can make transactions without the intervention of a third party like banks, Paypal, etc.
Types of Cryptocurrencies
When people think of cryptocurrencies, most of them probably think of Bitcoin (BTC). Bitcoin is regarded as the flagship cryptocurrency. There are approximately 2,500 different cryptocurrencies, many of which employ their own bespoke blockchain tailored to their needs. However, famous cryptocurrencies are Bitcoin (BTC), Litecoin (LTC), and Ethereum (ETC).
Steps to know before investing in Cryptocurrencies
Let’s take a look at the fundamentals of cryptocurrency investment that any first-time investor or newbie should be aware of:
Step 1: Choose your Cryptocurrency
First, you have to decide which cryptocurrency you are willing to purchase. Here comes the actual complication of cryptocurrency as 2500 cryptocurrencies are available in the market. Right now, Bitcoin is drawing the most attention and is the largest cryptocurrency. Then comes Ethereum, Litecoin, Ripple, etc.
Step 2: Choose your Crypto Exchange
You can not buy cryptocurrencies from financial institutions like banks or investment brokerage firms. Dealings of crypto are limited to some crypto exchanges. Processing costs, reputation, cryptocurrency availability, exchange rates, and trade security differ amongst crypto exchanges. Before settling on an exchange platform, new buyers should conduct extensive research and have a precise plan and strategy. Some famous crypto exchanges are eToro, Coinbase, Coinbase Pro, and Binance.
Step 3: Get a Wallet
Cryptocurrencies are stored in digital wallets. A digital wallet enables you to send and receive cryptocurrencies and keeps track of your available balance and transactions. There are several sorts of wallets available, all of which provide a great deal of freedom and flexibility and a higher revenue inflow.
Step 4: Secure your Cryptocurrency
It’s crucial to save your cryptocurrency once you’ve bought it. While cryptocurrency enables anybody to be their own bank, it also has certain negative consequences. Without a central bank, there will be no customer service, no assured asset security, no insurance, and no one to contact if something goes wrong. To avoid this, you should use a unique and secure password and keep your private key out of reach of anyone.
Follow these steps if you want to start your career as a crypto trader. If you have any questions, feel free to ask any time.