cryptocurrency basics

Cryptocurrency Basics For Beginners

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The most famous and most popular cryptocurrency is Bitcoin. At the time of writing, Bitcoin has hit its all-time high, briefly surpassing the $ 67,000 mark. Crypto exchange rates are changing rapidly and look impressive. But before investing in digital assets, there are a few basic things to know.

What is cryptocurrency?

Cryptocurrency is virtual money that can be used to pay for goods and services on the network. The scope of application of digital coins is very different, for example, Bitcoin has already “grown” beyond its platform, it is increasingly used as a full-fledged means of payment along with fiat money.

Among other coins, there are those that can be used to pay exclusively for services and goods produced by the company that created the coin.

The vast majority of digital currencies use blockchain technology. This technology unites computers located in different parts of the planet into a single decentralized network, where transactions are made and recorded. Blockchain cannot be hacked or blocked and this is one of the reasons for the growing popularity of cryptocurrencies.

How many cryptocurrencies are there?

By the end of October 2021, over 13,000 coins and tokens were publicly traded and the number continues to grow. The market price of coins varies greatly. Bitcoin now costs more than 65,000, and the price of very young coins, not seen against the general background, is expressed in thousandths and ten-thousandths of a dollar.

Why are cryptocurrencies popular?

There are several typical reasons for being interested in digital currencies:

  • Some people consider them the currency of the future and buy them now, before the coins have risen in price.
  • Many people like the lack of control and regulation by the central authorities. A digital coin will cost exactly what market participants agree to pay for it.
  • Users love the high speed and security of blockchain transaction processing.
  • And finally, currency speculators are delighted with the rate of growth in the price of cryptocurrencies. They see them as an opportunity to increase their capital.

Are cryptocurrencies a good investment?

The value of cryptocurrencies as an investment tool is still controversial. This is the highest risk asset type currently available. And therefore, many investors view digital assets as a means of speculation rather than as a real investment. Cryptocurrencies by themselves do not generate cash flows; their price rises only because there is someone who is willing to pay more.

How to buy cryptocurrency?

Bitcoin and some other cryptocurrencies are available for purchase with US dollars, euros and other national currencies. However, there are coins that can only be bought with Bitcoin or other digital currency.

To buy cryptocurrency, you need a wallet to store it. For starters, it will be an online application. The easiest way is to open a wallet on a cryptocurrency exchange. You select a trading platform with the most acceptable conditions for you, register an account, and a wallet is immediately provided in your account.

Please note this applies to custodial exchanges such as Coinbase, Kraken, Binance, eToro, Gemini and others.

After your registration is confirmed, you can start trading. However, before investing real money, study the functionality of the exchange. If there is an opportunity on the trading platform, practice on demo accounts. This will help you to understand how LTC to BTC converter and other functions work.

Are cryptocurrencies legal?

The legal status of digital currencies varies greatly from country to country. They are legal in the United States, and China has officially banned them. To answer this question, study the legislation in your country.