Everything you need to know about Investing in Cryptocurrencies
There are many different aspects to crypto investing that can take time to get a grasp on. From Bitcoin to crypto mining to digital wallets – if you’re not familiar with cryptocurrencies, these terms can sound quite foreign. This article will look at all the basics you need to be across when it comes to investing in cryptocurrencies, giving you the know-how needed to kick start your investing journey.
What is Bitcoin?
Those not too familiar with cryptocurrency have still probably heard of Bitcoin. Bitcoin is the most popular digital coin available, first being introduced in 2009 by an individual or group who operate under the pseudonym Satoshi Nakamoto. Since it’s launch Bitcoin has propelled to the top of the crypto popularity charts, now representing 50% of the total amount of digital tokens in circulation.
How does cryptocurrency work?
To get your head around it, think of cryptocurrency as an alternative to using your credit card – except the numbers in your account represent cryptocurrency instead of your normal currency. Unlike a usual money transaction that has a third-party financial institution involved, crypto transactions are carried out via exchanges such as CryptoSouk. Cryptocurrencies are governed through Blockchain technology, where everyone manages their own digital assets, unless they pass through a decentralised system such as an exchange.
In order to make a crypto transaction, both users require digital wallets. Owning a digital wallet signifies that you own cryptocurrency. You then use that wallet to transfer cryptocurrency to another digital wallet.
What is Cryptocurrency Mining?
In the crypto world, mining refers to the process of solving cryptographic puzzles in order to add digital transactions to the ledger (Blockchain). The end goal is to receive digital coins as a result of this mining. Those that manage the software and hardware aimed at confirming these digital transactions are referred to as cryptocurrency miners.
How to trade Cryptocurrency.
Investing and trading crypto takes place via an exchange. An exchange is essentially a portal that connects traders to the world of crypto. There are many exchanges for traders to choose from, however not all exchanges are necessarily good. Here are some things to watch out for when looking to choose a new exchange:
- Validity: always check to make sure the exchange your looking at is available in your area. Not all exchanges operate globally.
- Reputation: do your research to make sure current users are happy with their experience on the exchange.
- Exchange rates: always check the exchange rates that come with an exchange. Some are more expensive than others.
- Safety: never trust an exchange that doesn’t have strict security protocols in place such as ID verification procedures.
Once you’ve gone through the above checklist and are happy with your selected exchange, go through the standard sign-up procedure and you’re ready to trade.
What are the different types of Crypto Wallets?
There are different types of digital wallets to choose from, including:
- Cold Wallet: a cold wallet stores digital coins “offline”. This ensures hackers can’t access your wallet as it’s technically not online.
- Hardware wallets: physical hardware wallets. They are small hardware devices that are used to store and run digital transactions.
- Paper Wallets: a paper wallet involves writing a private and secure code down on paper and physically securing it offline. These wallets must be imported into a hot wallet in order to be spent.
- Smart contracts: an alternative to a wallet is a smart contract. They act similar to a vending machine and enable certain crypto transactions.
Investing in Crypto
With over 1500 cryptocurrencies now available, it’s fair to say that the crypto market has certainly taken off. In 2017 the market cap of crypto increased a staggering 4000%, now worth a total of $454 billion.
While predicting crypto price is difficult, it’s easy to predict that it’s popularity will continue to increase. I hope this article has brought you up to speed with all you need to know to begin your crypto trading journey.
The information contained within this website and resource section is not intended to be a substitute for financial advice or promotional offer on the investment or purchase of Cryptocurrencies, digital tokens or related assets. Although care has been taken in preparing the information provided to you on this site and in the resource section, we are not held responsible for any errors or omissions and accept no liability whatsoever for any damage or loss you may incur through the result of your own actions and decisions when deciding to purchase or invest in Cryptocurrencies or related digital assets. You should never engage in trading unless you fully understand the nature of the transactions you are entering into and the extent of your exposure to loss. We recommend you always seek financial/or legal advice counsel relating to your investment and purchase circumstances. This material has been prepared for informational use only.