What Is Cryptocurrency? Here Is Everything You Need To Know About Cryptocurrency

What Is Cryptocurrency? Here Is Everything You Need To Know About Cryptocurrency

A cryptocurrency is a form of currency but the difference between cryptocurrency and a regular currency which we use in our daily lives is that the former is digital and decentralized. What has led to cryptocurrencies gaining attention from everywhere around is the fact that they can be stored and witness growth exponentially in value. This might be a surprise for many – well, there are not one, not two, not tens but thousands of cryptocurrencies. But some popular cryptocurrencies are Bitcoin, Ethereum, XRP,  Cardano, Litecoin. Some of the cryptocurrencies are used instead of cash while some are used for private, direct transactions. 

Cryptocurrencies work using a technology called the Blockchain. Blockchain is a decentralized technology spread across many computers that manage and records transactions. Part of the appeal of Blockchain is its security and assurance.

Learn More: What is Blockchain Technology?

Why invest in cryptocurrencies?

Cryptocurrencies are similar to stocks and real estate. While all can be traded in a centralized fashion, they are different in a few significant ways. Cryptocurrencies, such as Bitcoin, are decentralized. While this may seem like a negative, it actually makes the market more efficient and secure, as there is no one entity (government, company, or individual) controlling and controlling the price. Trading and holding cryptocurrency has some major advantages. First, there are no transaction fees.  Transactions are very quick, very secure, and very cheap. It can be worth $0.01 to $0.02, making it a very easy decision to buy an extra $5 to $50 for yourself or to trade for a profit. Another common reason to invest in cryptocurrency is the desire for a reliable, long-term store of value. Unlike fiat money, most cryptocurrencies have a limited supply, capped by mathematical algorithms. This makes it impossible for any political body or government agency to dilute their value through inflation. Moreover, due to the cryptographic nature of cryptocurrencies, it is impossible for a government body to tax or confiscate tokens without the cooperation of the owner.

See Also: Impact of 5G technology in our lives 

How to buy cryptocurrency

It’s important to note that there is no exchange that is 100% secure and 100% secure is also very hard to achieve. This is not to say that a trader should avoid using a reputable trading platform, but it is worth noting that a user’s identity and account credentials are always at risk. However, because cryptocurrencies are not regulated, the online exchanges you use to trade the various tokens are not required to use the most secure security practices. Here are some basic rules to follow when purchasing cryptocurrencies: 

1. Choose an Exchange

There are lots of cryptocurrency exchanges. Due to decentralization and individual privacy, some exchanges even allow users to remain anonymous and do not require users to submit their personal information. Such kinds of exchanges operate autonomously and, typically, are decentralized which means they do not have an origin of control.

In today's scenario, however, the popular and renowned exchanges are not decentralized and they require KYC. In the United States, these exchanges include Coinbase, Gemini, Kraken. These exchanges have grown significantly over the last few years and in the number of benefits they offer.  

2. Connect Your Exchange to a Payment Gateway

Once you have chosen an exchange, now you have to submit your personal documents. These documents may include a driver's license, social security number, as well as information about your employment or other sources of income. The information you submit may need can depend on the country/region you live in and the laws within it. 

After the exchange verifies your documents and legitimacy you may now connect a payment option. At most exchanges, you can connect your bank account directly or you a debit or credit card. 

3. Place an Order

After completing the above steps now you can buy Bitcoin and other cryptocurrencies. In recent years, cryptocurrency exchanges have slowly become more mainstream. They have grown exponentially in terms of liquidity and their breadth of features. The operational changes at cryptocurrency exchanges parallel the change in perception of cryptocurrencies. An industry that was once thought of as a scam or one with questionable practices is slowly growing into a legit one that has drawn interest from all the big players in the financial industry.

4. Store Cryptocurrency in Wallet

Cryptocurrency wallets are a special kind of wallet that stores your cryptocurrency more securely. Having your crypto in your personal wallet ensures that only you have control over the private key to your funds. It also gives you the ability to store funds away from an exchange and prevent the risk of your cryptocurrency or exchange getting hacked. Some Popular wallets are:

• Mycelium (https://mycelium.com),
• Coinbase (https://www.coinbase.com)
• Bitstamp (https://www.bitstamp.com)

See Also:  What is Cloud Computing?

How to Trade Cryptocurrency

How to Buy Cryptocurrency?  How to buy Cryptocurrency with a credit card? How to buy Cryptocurrency without a credit card? How to Sell Cryptocurrency?  The three main apps you will need are Coinbase (the most popular and easiest to use), BitGo (more secure, but more expensive), and Kraken Exchange (more user-friendly and cheap). Coinbase is by far the most popular and easiest to use exchange because it is one of the most popular and most used exchanges. Coinbase works directly with various banking institutions and exchanges to allow users to transfer money between their bank accounts, from their wallet to Coinbase, and to other exchanges. Coinbase also offers much more transparency, because you can see where all your money goes and what you’re investing in.

Should I buy cryptocurrency now?

So you are interested in buying cryptocurrency, and you are confused about when should you buy it? To be honest,  it doesn't really matter - until and unless you're strategic about it.

The key to earning money in stocks is to buy strong investments and hold them for a long time of period. If the investments were really good, they should grow over time, and their prices will increase automatically.

The same principle is applied to cryptocurrency. If you think cryptocurrency has a bright future, it doesn't necessarily matter whether you buy when Bitcoin costs $60,000 or $30,000 per token. If it ends up reaching, say, $500,000 per token someday, you'll make a hefty profit regardless.

There is no guarantee that Bitcoin or any cryptocurrency will succeed. But if you're going to invest in them, it should be because you believe in their potential and are willing to hold your investments for the long term. If you're only investing to try to make a quick buck, then my friend it is risky you'll most likely end up losing more than you earn.

Conclusion

A new day has arrived and with that a new level of growth and awareness within the Bitcoin and cryptocurrency community. In the last few years, cryptocurrencies have grown at an exponential rate and have reached a tipping point in the industry. But it does not mean that if you buy cryptocurrency you will be Bill Gates or Jeff Bezos in a year or two. You need to be patient and you should invest in cryptocurrency if and only if you have the potential to hold your investments for the long term.

Please share your thoughts about cryptocurrency below!!

Want to learn more about Technology and Programming? Check out this amazing blog."