Cryptocurrency has taken the world by storm over the past few years, and its influence on the global economy has only just begun to be felt. As it becomes more and more accepted, more businesses are beginning to accept it as payment, and more people are buying into it in hopes of getting rich quickly with the next Bitcoin or Litecoin spike.
In this article, we’ll take a look at cryptocurrency as an investment opportunity, how it compares to fiat currencies and why you might want to consider getting involved with cryptocurrency today.
What is cryptocurrency
It is a digital or virtual currency that uses cryptography for security. A cryptocurrency is difficult to counterfeit because of this security feature.
A defining feature of a cryptocurrency, and arguably its most endearing allure, is its organic nature; it is not issued by any central authority, rendering it theoretically immune to government interference or manipulation.
A quick history of cryptocurrency
While cryptocurrencies are now a familiar part of our modern financial landscape, they’re still something new to most people. In fact, Bitcoin was first introduced in 2008—it was designed as an alternative payment method for e-commerce transactions by Satoshi Nakamoto, an alias for an unknown individual or group. Since then, other cryptocurrencies have emerged: Ethereum, Monero, and Zcash are just a few examples.
What are cryptos used for
If you’re not familiar with cryptocurrencies, they’re an entirely digital form of money. While they’re not necessarily used to buy or sell goods, they can be exchanged for traditional currency like dollars, pounds, or euros.
While bitcoin is by far the most famous crypto (it leads in market cap), there are hundreds in circulation including Ethereum, ripple, and litecoin. Investors may trade cryptos on exchanges, similar to how shares are traded on stock markets.
Advantages and disadvantages
Since its inception in 2009, bitcoin has become increasingly popular—and controversial. The first digital currency to employ cryptography as a form of protection for its transactions, bitcoin is viewed by some as a viable alternative to fiat currency.
Proponents also argue that it can be easily integrated into existing banking systems; conversely, critics have identified several shortcomings they believe need correcting before cryptocurrency can achieve mainstream status.
Here are some pros and cons to consider when deciding whether you should buy bitcoin or steer clear of it altogether.
Picking a crypto
Most cryptocurrencies are created through what’s known as a mining process. Essentially, miners—people who set up incredibly powerful computers to run blockchain technology—compete against one another to solve complex math problems that reward them with coins for their work.
The most popular currency, Bitcoin, is created through a similar process called mining; Ethereum is built on its own unique protocol and doesn’t use mining at all.
How do I get started investing in cryptos
For most people, getting started investing in cryptocurrencies starts with buying Bitcoin. There are two main reasons for buying Bitcoin: a. As an investment, or b.
To buy goods or services from someone who accepts it as payment (an expanding list). In order to buy Bitcoins, you’ll need to get a cryptocurrency wallet and exchange account (to convert your local currency into or out of cryptocurrency).
This can be done on any number of exchanges, including Coinbase, Gemini or Kraken.
How do I keep my coins safe?
Similar to real money, you should keep your cryptocurrencies in a safe place. The safest way to store your bitcoins is using a hardware wallet such as a TREZOR wallet or a Ledger Nano S.
These wallets allow you to store your bitcoins offline so they can’t be hacked. Keep in mind that even if you own cryptocurrency, there is no guarantee against theft. Always protect your coins with backups and make sure to keep copies of your private keys somewhere safe!