What is cryptocurrency?
Recently many people have wondered what cryptocurrency is and with good reason too. Cryptocurrency is a digital currency that allows you to make secure online payments without worrying about extra transactional fees.
The most commonly known cryptocurrency is Bitcoin. It was launched back in the year 2008 by a group of people who go by the name Satoshi Nakamoto. While Bitcoin is based on open-source code, the software for this cryptocurrency was launched in 2009.
The term Cryptocurrency refers to the digital ‘coins’ or asset without a central bank or administrator. This digital currency can be sent from user to user on Bitcoin’s peer to peer network. Cryptocurrency began with Bitcoin and still remains one of the world’s biggest, strongest, and most influential currencies yet to exist.
Cryptocurrency works with blockchain technology, a decentralized network that records and manages all users’ transactions. This network is responsible for the security and safety of cryptocurrency and is practically impenetrable and tough to hack.
Many people have wondered if cryptocurrency is legal. It’s been stated that while cryptocurrency might be legal in the United States, it has been banned in China. However, there is no concrete answer to this question. The legality of cryptocurrency depends on the country that you’re in and whether or not you’re allowed to trade with it in your country.
It’s also a great news that more and more countries slowly starting to legalize the use of cryptocurrency.
Buying cryptocurrency, especially Bitcoin is fairly easy. This can be done using USD and at almost any rate or price you choose. Although, other cryptocurrencies require you to purchase or pay with Bitcoin or any other cryptocurrency.
To purchase cryptocurrency, you’ll be required to have your own “wallet”, this is an online app that allows you to hold your digital currency. The most popular cryptocurrency trading exchange is Coinbase. This is where you’ll be able to securely buy and sell Bitcoin or any other digital currency.
Currently, there are more than 10 000 different types of cryptocurrencies that are being traded publicly. The total value of all of the cryptocurrencies might shock many people which has a total of $1.8 trillion. With bitcoin taking over at the top with a value of $850 billion and rising.
These are the top 10 cryptocurrencies that are leading by a mile based on it’s current value, them being:
- Bitcoin (BTC)
- Ethereum (Ether)
- Tether (USDT)
- U.S. Dollar Coin (USDC)
- Binance Coin (BNB)
- Ripple (XRP)
- Binance USD (BUSD)
- Cardano (ADA)
- Solana (SOL)
- Dogecoin (DOGE)
Cryptocurrency mainly gained popularity since it is not a government-controlled currency but rather a decentralized processing and recording system. Cryptocurrency is also built on a secure protocol.
Many people enjoy the fact that they don’t need to rely on a credit card service but rather the fact that they’re able to control what leaves their “wallet”. One of the best parts of cryptocurrency is that it technically won’t be affected by inflation, unlike our money held in the bank which often loses value due to inflation.
Investing in cryptocurrency might not be for everyone but those who do, are risk-taker, and comes up with a strategy with conviction.
Risk of Cryptocurrencies
As Cryptocurrency popularity rises, many of the scammers takes advantage to this opportunity to manipulate crypto users. Here are some of the reported types of cybercrimes:
one of the most sophisticated scams wherein a scammer pretends to be a person/business to get an advantage. This motivation usually lies in stealing sensitive data such as personal information, OTP, and account details.
There are various ways to avoid this type of scams, check for a verified logo to ensure if its a legitimate account of a person/business, this often applies on social media platforms such as Facebook, Instagram, Twitter, Tiktok etc.
Think twice before opening links in text messages and emails, especially ones that ask you to give personal information or make a payment.
- Fake wallets
This is where you store your digital currency and it is a requirement for cryptocurrency trading to have at least one. Many of these fake E-wallets have appeared on Google Play Store and even on IOS devices. They design to resemble and make the app as real as possible. To avoid needless loss, a crypto investor needs to be able to distinguish between legitimate and fraudulent applications.
- Fake giveaways
A hacker will compromise or pose as a well-known brand or organization, then declare that they are giving away cryptocurrency. They will convince you first to send some cryptocurrency to the advertised address in order to enter the coin giveaway. They frequently claim to send back double as much as you sent.
if it sounds too good to be true then it most likely is. Think twice before sending your crypto
These are some of the common types of scam, always remember to be vigilant especially when it comes to this matter as the result of a mistake is irreversible, if you have encountered a situation like this, immediately report them to the respective social platforms and disregard the suspicious emails and SMS.
How to safely invest in cryptocurrency?
Based on some findings, most of investments involve risk, but some professionals believe that cryptocurrencies are among the riskier investing options available. The following tips can help you in Investing cryptocurrencies and make a strategical decisions:
- Start with small amount. Due to the fact that cryptocurrency values can fluctuate wildly, you should only spend a small portion of your money until you fully comprehend how the crypto functions. You wouldn’t want to put all your bet in one in one basket and hope for the best. In this regard, crypto is no different.
- Make a variety of investments. Any good investment strategy must incorporate diversification, and investing in cryptocurrencies is no exception. Don’t invest all of your funds in Bitcoin, for instance, just because you are familiar with the name. There are countless possibilities, thus it’s best to make a variety of investments among several cryptocurrencies.
- Do a research beforehand. To purchase anything, the first rule is to research the seller. The foundation of any financial transaction is trust, and purchasing cryptocurrency is no different. Once more, you should conduct your own research by going to YouTube, signing up for Google Alerts, and participating in cryptocurrency forums and chat rooms. You ought to be able to identify the reliable platforms quite quickly once you get past the hype.
Benefits of using Cryptocurrency
There are numerous advantages in investing cryptocurrency, here are few of the benefit to consider:
- Inflation protected
- Fast transaction
- Strong Security
- Global and Borderless
- Market volatility
- Irreversible transactions
- Prone to scams
- Takes time to understand
- Long-term Investment
Frequently Asked Questions about Cryptocurrency
How to cash out cryptocurrency?(For all platforms)
So, you are prepared to sell your digital assets for cash now that you have some bitcoin or another cryptocurrency in your wallet. This is a typical step in many people’s journey into cryptocurrency investing
This is a typical step in many people’s journeys into cryptocurrency investing.
But regardless of whether you want to cash out your cryptocurrency for phenomenal returns or to free up cash, you need to be aware of your alternatives so you can do so securely and without paying excessive costs.
Fortunately, there are a number of safe options to convert your cryptocurrency into cash if you require normal fiat quickly.
- Peer-to-Peer Exchange
Selling cryptocurrency through decentralized, peer-to-peer (P2P) exchanges is another way to convert it into cash. One is that P2P exchanges frequently have lower trading charges. Additionally, you can haggle with sellers to acquire the greatest price for your cryptocurrency. Furthermore, a lot of P2P networks are decentralized, therefore using the platform doesn’t require you to prove your identity. And if you can find the right buyer, you can trade in pretty much whatever currency you desire.
- Through a broker or exchange
This is comparable to the way that airports handle currency exchange.
The broker will send the funds to your bank account when you deposit your digital currency for exchange and submit a withdrawal request.
You must, however, withdraw your money using the same bank account that you used to deposit it because brokers are subject to money laundering regulations.
More than 43 million people use Coinbase, a well-known centralized exchange, in more than 100 different countries.
It offers a wide variety of cryptocurrencies, including bitcoin, for sale and purchase. Along with providing good education on all things bitcoin, it also enables you to keep track of your cryptocurrency assets.
Fees range from $0.99 to $2.99 depending on the transaction’s value and include 0.50% of the spread.
Additionally, there are charges according on location and withdrawal method. For instance, there will be a greater cost for withdrawals from a credit card balance.
- Bitcoin ATMs
Bitcoin ATMs are not regular ATMs, despite the fact that they have the appearance of one.
To conduct Bitcoin transactions, the trader connects directly to the Internet rather than their bank account.
You may scan QR codes at Bitcoin ATMs to exchange your bitcoin for cash. The globe is filled with these ATMs. On the Internet, it is simple to find out where they are.
You should keep in mind, though, that they typically have higher transaction costs than other ways to pay out. Additionally, not every Bitcoin ATM provides the ability to purchase and sell.
- Bitcoin Debit cards
You can withdraw Bitcoin with a prepaid debit card from many websites. This card can be just like any other debit card that accepts Mastercard or Visa . The best part about utilizing a Bitcoin debit card is that practically all businesses accept it for both online and offline purchases. These debit cards can withdraw money from ATMs that accept them.
What are public and private keys?
The next significant addition to the list of the finest crypto questions would focus on the fundamental components that make cryptocurrencies function. Public-key cryptography serves as the main support for Bitcoin and other famous cryptocurrencies. The cryptographic system states that two distinct key types, such as a public key and a private key used in pairs, can support cryptographic transactions.
The public keys should be made available to the public because they are crucial for identification. However, the private keys are implied to be secret because they are used for encryption and authentication.
What is Blockchain?
Blockchain was mentioned in every list of cryptocurrency questions for beginners that you could discover. The first successful application of blockchain in the real world is Bitcoin, the original cryptocurrency. In essence, blockchain technology is a secure, trust less, open, and transparent ledger.By utilizing proof of work consensus and public-key encryption techniques, it aids in the secure transfer of ownership of units of value.
Blockchain relies on decentralized consensus to maintain the network, cutting out middlemen like the government, banks, or businesses.
Additionally, as the blockchain network grows, the degree of decentralization rises, enhancing blockchain security. It’s interesting to note that the benefits of blockchain technology extend beyond Bitcoin to include financial services.
What are wallets for cryptocurrencies?
Your curiosity in buying cryptocurrencies would then direct you to cryptocurrency FAQs about crypto wallets.
In contrast to exchanges, crypto wallets are essentially platforms for the secure storage of digital assets.
A wallet could be held by a user through an exchange account, a custody wallet, or even from somewhere else entirely.
In actuality, cryptocurrency wallets aid in the storage of your coin’s private keys on the blockchain.
There are two different types of cryptocurrency wallets, such as hot wallets and cold wallets.
Users with internet access can use their computers, mobile phones, or tablets to access the hot wallets.
In contrast, users’ bitcoin private keys are kept offline in cold wallets improving security as a result. However, you must concentrate on the cold wallet’s security, which might be a USB drive or a piece of paper.
What factors account for cryptocurrency’s rising popularity?
Some frequently asked questions concerning cryptocurrencies are also based on the reasons why cryptocurrencies are so popular.
It’s interesting to note that there are several explanations for why cryptocurrencies are so popular.
One of the most prevalent theories positing cryptocurrencies as the future’s money is one of the factors contributing to their popularity.
Additionally, cryptocurrency eliminates the need for banks and other financial middlemen to concentrate on devaluing currency.
The biggest draw for the future of cryptocurrency is, most importantly, the technology that underpins it—blockchain.
In contrast to traditional payment systems, blockchain provides a decentralized mechanism for processing and recording transactions with higher levels of security.
People are turning to cryptocurrencies in great numbers due to the rise in value of cryptocurrencies.
Who controls cryptocurrency?
The implications of control and ownership of cryptocurrencies are also indicated by frequently asked questions for beginners about cryptocurrencies.
Blockchain does not give a single entity power over a cryptocurrency.
Cryptocurrency architects or creators can, however, impose restrictions, such as guidelines for buying or selling cryptocurrencies.
On the other hand, people are given the opportunity to distribute, control or manage the day-to-day operations of cryptocurrencies.
Additionally, owners’ identities are concealed, and there is no reliable regulatory framework for establishing ownership of cryptocurrencies.
Is it advisable to make cryptocurrency investments?
You must be aware of their volatility if you want to determine whether cryptocurrencies are a suitable investment.
Cryptocurrencies are unstable and do not produce a cash flow like traditional currencies do.
A currency should be stable in order to assist businesses and consumers in setting fair prices for items. Since their debut, Bitcoin and several other well-known cryptocurrencies have hardly demonstrated any signs of stability. For instance, Bitcoin’s value fell to almost $3200 in 2018 from almost $20,000 in 2017. As of 2021, Bitcoin has succeeded in reaching all-time highs. It is easy to draw a conclusion regarding bitcoin investments when price volatility is the main worry.