Cryptocurrency: A Beginner's Guide

By aly_52 | InvestwithAly | 20 Mar 2022


Cryptocurrency: A Beginner's Guide

Have you heard about cryptocurrencies? They’re all the rage and many people are investing in them, but what is it?

Cryptocurrencies are intangible digital coins that are encrypted. They're not any country's legal tender. You can use them to make payments without the need for a third party like PayPal or a bank. Digital currencies are created and managed by a decentralized authority. This means no single person or company controls it or decides its policy. Bitcoin, for example, is the first decentralized digital currency created in 2009. It has become one of the most popular cryptocurrencies in the world, with prices going as high as $60,000 per Bitcoin!

If you want to know more about cryptocurrency and how to get started investing in it, read on!

 

What is cryptocurrency?

Cryptocurrencies, or digital coins, are intangible. They're not a country's legal tender and you can use them to make payments without the need for a third party like PayPal or a bank. Digital currencies are created and managed by a decentralized authority. This means no single person or company controls it or decides its policy. Bitcoin is one of the most popular cryptocurrencies in the world and prices have gone as high as $60,000 per Bitcoin! If you want to know more about cryptocurrency and how to get started investing in it, read on!

 

Why should you invest in it?

There are a lot of reasons why the cryptocurrency is worth investing in. First, digital currencies have the potential to make you wealthy. And second, it’s becoming more popular among retailers who want to avoid credit card transaction fees.

Digital currencies can be an excellent way for young people to invest as they typically carry low-to-no risk and high reward. Cryptocurrencies can grow in value, so over time, your investment would also increase in value. Bitcoin has grown significantly in the last few years, with prices going from $1,000 per Bitcoin to $60,000 per Bitcoin!

If you are looking for a way to invest money that could potentially give you a lot of profit without a lot of risks, then cryptocurrencies might be the perfect option for you!

 

How does cryptocurrency work?

Cryptocurrencies are intangible digital coins that are encrypted. They're not any country's legal tender. You can use them to make payments without the need for a third party like PayPal or a bank. Digital currencies are created and managed by a decentralized authority, which means there's no single person or company who controls it or decides its policy. Bitcoin, for example, is the first decentralized digital currency created in 2009. It has become one of the most popular cryptocurrencies in the world, with prices going as high as $60,000 per Bitcoin!

 

How are cryptocurrencies created?

Cryptocurrencies are created through a process called "mining." This is how new coins are generated. The first person to complete the process of mining, or solving complex math problems, will receive an award. The award is just a newly discovered coin that can be traded or sold on the open market.

When a cryptocurrency like Bitcoin is mined, computers around the world compete for the reward by racing to solve computer puzzles (or hash) and win bitcoins with each puzzle solved. For example, when someone mines bitcoin, they are collecting transactions from people paying in other currencies and recording them in blocks which provide a link between all transactions in the cryptocurrency's blockchain.

 

The risks of investing in cryptocurrencies

The first thing that you should know is that there are risks when investing in cryptocurrencies. The price of the coins can change quickly and unpredictably, meaning you could lose a lot of money. For example, in December 2017 the value of Bitcoin went up to over $19,000 and then dropped to below $6,000 less than two weeks later. This means that if you bought Bitcoin at the height of its increase, you would have lost about half of your investment!

But what about the benefits?

One major benefit is that it's decentralized. So no one controls it or decides its policy. You don't have to trust anyone person or company. Another benefit is that they're not regulated by governments so they can be used outside of traditional banking systems and as an alternative to cash for specific transactions like ransom payments.

However, because cryptocurrency isn't regulated by governments, it also comes with some downsides. It's not uncommon for hackers to break into exchanges where people buy and sell their coins. And because cryptocurrencies are intangible digital coins with no intrinsic value, companies who accept them as payment risk losing money when their value changes unexpectedly fast and they can't convert their earnings back into currency they understand better (like US dollars).

Ultimately though, these risks are worth it if you're interested in investing in cryptocurrencies because there are many benefits too!

 

Conclusion

Cryptocurrency is a new kind of asset class that has the potential to provide outsized returns and promote a level of financial freedom. The number of cryptocurrencies available to trade is increasing with each passing day. This article has given you a brief overview of cryptocurrency. You should now be able to make your own informed decision about whether or not you should invest in cryptocurrency.

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aly_52
aly_52

I am a trader and investor in crypto.


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