Crypto or cryptocurrency is once again on the rise. It’s popularity is spiking, which is part of the reason many folks are investing in it. Some people don’t know much about the currency, and if that’s you, you’re going to learn some information here.
The thing is you can’t start investing in something you don’t know. Well, you can, but it’s not wise to do so. What you need is a quick crash course to help you see your options.
What is Crypto
First, we must explore what cryptocurrency is. It feels like a natural place to start, and the first thing you should know is that it’s digital money. Granted, that’s a simplistic definition, but it’s a good place to start.
What you’ve got here is a digital system of transactions between regular folks. All of these transactions are unbrokered and decentralized, thanks to blockchain technology.
The data of each coin and transaction is stored, and this is why coins are exchanged so freely.
You should know there are many cryptocurrencies out there. Some are well established, while others are still attempting to break into the world. Each cryptocurrency has its own coin and value.
The more established cryptocurrencies have the most valuable coins. One major difference between crypto and regular money is that crypto isn’t backed by a particular government.
Regular money has been traditionally backed by a government. For a while, it was backed by some other valuable commodity, like gold or silver. Nowadays, it’s fiat money, which isn’t backed by anything other than a promise from the government that it’s valuable.
Government-backed currency is controlled by that government. They can decide to print more money or less, meaning they can sort of control the value how they see fit.
That’s no longer the case with crypto. This type of money isn’t controlled by anything except its internal value created by those who use this type of money or decide to invest in it.
In essence, the value is created by the collective rather than some entity like the government. Folks and countries that want freedom from the restrictions that some powerful governments impose are in love with crypto. It’s easy to see why, too.
Those who are concerned about safety don’t need to be. The technology that protects cryptocurrency is pretty advanced.
Everything is logged and secured. Data corruption is difficult since it doesn’t depend on one centralized location. If an error occurs, the rest of the blockchain verifies and corrects it.
How Does it Work?
We can’t dive into the details too much here, but we’ll try to at least help you understand the basics.
The way all of this works is through blockchain tech and the open-source ledger format. The open-source ledger is one reason you can trust cryptocurrency because it’s a savvy way to protect the data.
In essence, the open-source ledger is created by mining, and people throughout the world do this mining. This process is sometimes called crypto mining. These miners don’t know each other, but they’re tasked to verify data.
If something looks array, then this system will verify and correct the issue. The main reason hackers can’t really corrupt this system is because they would have to simultaneously corrupt each miner, and these folks are all over the world.
Once the data is confirmed numerous times, the information is added to the ledger in the form of blockchain units. This is the reason you hear the term blockchain when folks are talking about cryptocurrency. Ownership and transactions are safe.
When a block unit is created, a predetermined amount of coins comes with it.
As more coins are added, the amount of coins produced by each block unit decreases. This is the way coins continue to maintain their value. It’s an exciting way to look at money.
How is Crypto Exchanged?
The next thing we need to talk about is how crypto is exchanged. If you’re going to be investing, you should know how to exchange these coins. The following will show you how simple it is to exchange these coins with people:
You need to choose the kind of cryptocurrency you’ll be exchanging.
-
- You start the transaction.
- The currency you want to send is converted into a blockchain.
- Okay, now, it looks like you’re sending some coins.
- The transaction is verified by some anonymous crypto miners.
- Once it’s verified, the transaction is added to the blockchain.
- The entire ledger recognizes the change.
- The currency appears where you sent it to, and that’s it.
The point is that you’ll send your coins and the recipient will get it and vice versa.
What Draws so Many to Crypto Investing?
At the moment, it’s estimated that 14 percent of Americans own cryptocurrency in the country.
More people around the world own crypto, and that number seems to be growing. The volatile nature of currency tied to different governments makes cryptocurrency very appealing.
What’s even more interesting is the diversity of crypto investors. The investors are rich, celebrities, regular folks, and everyone has the same opportunities depending on how much they’re willing to spend.
These coins are available worldwide, so you’ll be joining all sorts of people, and that’s part of the reason many investors like this new type of currency.
The popularity factor is real, too. Everyone seems excited about investing in this digital money. This encourages uninterested people to be more interested in the opportunity. They want to be part of the cool club of investors.
It might sound a little incredible that folks would invest in something because it’s popular, but it happens. It’s a powerful feeling, and it’s one of the reasons people flock to cryptocurrency.
How to Get Into It
Now that you know a little more about cryptocurrency investing, we can move on to learning how to do it. The following are some steps potential investors should take:
Research
It all starts with research. There’s a lot of cryptocurrencies out there, and some are pretty new. It’s important to learn everything about them and understand their business model before investing. This is going to take some time, and it should.
Keeping Up With the News
The next thing any potential investor has to do is keep up with the news. Crypto is quite volatile since it’s new. Things keep moving in all sorts of directions. Investors need to be in the know at all times, so this means keeping up with the news.
Now, keeping up with the news isn’t always easy. People will need to seek out a few publications that focus on crypto news, and save those publications or subscribe to them. You’ll want to check on them periodically.
No one will know everything there is to know, but investors try to learn as much as possible. They use this information to make decisions about their crypto investments.
Just like any other investment, there’s some work involved, but that’s okay. Investors fall in love with this type of currency so much so that the work becomes fun and exciting.
Learning About the Exchanges
The next thing potential investors are going to have to do is learn about the exchange or trading platforms. There’s a lot of them out there, and they all have different perks and disadvantages. Potential investors are going to have to choose.
Investors have to take a lot into account, like the price, the security, the reliability, and the review from past and current users. The goal is to choose a platform that’s going to make you feel the most secure and supported.
Choosing the right platform is pretty important. You should take your time to make the right decision.
Understand Limits
Every investor has a limit. The problem is that some investors, especially new ones, get a little too excited and start investing more than they need to. This could put people in financial trouble.
An investor that knows and adheres to their limits will have an easier time investing. Just like any other investment opportunity, there are risks here, especially with a market as volatile as crypto.
Those limits are there to protect you and to reduce any potential stress people might feel if they overextend themselves, which is what usually happens when limits aren’t honored.
If you think you’re ready to explore crypto, a good place to start would be Coinbase. It’s a popular exchange where you can easily move your real world money (fiat) into cryptocurrency. It’s free to create an account and you may be able to get Coinbase for a verified account. Verified meaning your identity is verified (i.e. you are who you say you are).