Cryptocurrency Basics
In the last 15 years, cryptos have revolutionized how we use and invest wealth. Cryptocurrencies have reduced transaction processing time and costs. They have even introduced autonomy in the financial sector.
Plus, traders enjoy various lucrative crypto investment opportunities. However, before investing in digital coins, you must know what they are and how they work.
What Are Cryptocurrencies?
Cryptocurrencies are decentralized, digital currencies that are traded via blockchain technology. Think of them as a parallel, digital form of wealth, unlike any cash currencies available today.
These digital coins offer alternative payment methods and speculative investment opportunities. These coins let people make payments securely without the need for a bank or central government.
How Do Cryptocurrencies Work?
Crypto coins and tokens are essentially stores of wealth, but they are not managed by governments or banks. Instead, their value depends on how much they’re prized by people, like any traded commodity.
Traders use crypto coins to make payments, top-up online wallets, and even trade for profit. These coins are supported by blockchain technology, which maintains a record of transactions and crypto owners.
What is The Blockchain?
Blockchains are ledgers or databases that maintain a decentralized record of crypto transactions. Since 2009, the usage of blockchains has exploded, resulting in the creation of smart contracts, NFTs, and DeFi.
Blockchain is somewhat like a bank, in terms of recording transactions, except that it is digital and decentralized.
How to Get Cryptocurrency Coins
Cryptocurrency Mining
The most basic way to earn some tokens is via mining. Miners validate crypto transactions and add them to the blockchain ledger. For this, they get some coins for themselves.
Trading Cryptocurrencies
Another simple method for acquiring cryptos is purchasing them. You can get them via broker-dealers or crypto exchange systems. Once you exchange your traditional currency for cryptos, you can store or trade them at will.
Cryptocurrency Coin Examples
There are over 13,217 cryptocurrencies as of March 2024. Unfortunately, not all of these are valuable or even active.
If you remove the dead cryptos, the list drops to 8,985 active coins.
Bitcoin
Launched in 2009, Bitcoin was the first cryptocurrency ever. Today, it holds the largest market cap. This coin helped popularize digital coins and is the most stable crypto available. It’s also the most valuable one, standing at over $65,000.
Ethereum
The next biggest player is Ethereum. Unlike Bitcoin, Ethereum is more than a digital coin. It is a decentralized computing platform that uses blockchains for application development and much more.
Is Cryptocurrency Safe?
Yes! As a form of payment, it’s safer than debit and credit cards. This is because cryptos don’t need third-party verification.
However, as a form of investment, it is not risk-free.
Are Cryptocurrencies Legal?
Cryptos are usually legal in countries like the USA, Canada, and Australia. However, they’re not legal tender. You can only use them in stores that accept digital coins as payment. China outlawed cryptos in 2023.
Advantages and Disadvantages of Cryptocurrencies
Here’s a breakdown of the pros and cons of cryptos:
Advantages
- Cryptos are inflation-protected
- Cost-effective transactions
- High transactional speed
- Safe and secure
Disadvantages
- Prices are volatile
- The mining process is quite costly
Cryptocurrency Frauds
As with any other activity that we go about online it’s important to make sure that we stay protected and only invest our money where it’s safe.
Ever since the advent of the internet there’s been those aiming at tricking people out of their hard earned money.
In our article about cryptocurrency frauds we go to the bottom with cryptocurrency frauds so that you can know what to look for and how to stay safe when you’re trading online.
Why is crypto so popular?
Ever wondered why everyone’s talking about cryptocurrency? Dive into our page titled ‘Why is crypto so popular?’ to find out! Learn why it’s making waves worldwide and changing how we think about money. Let’s unravel the mystery together!