On the news and internet media, cryptocurrency has gained popularity and traction in recent years, earning more and more recognition and becoming increasingly versatile as companies and users begin experimenting with its use.
It can take a lot of research to understand what cryptocurrency is, how it works, and how people can make use of it. You may have questions about cryptocurrency. Here is an overview to help you get started.
What Is Cryptocurrency?
Cryptocurrency is a type of currency that functions in many ways the same as regular, physical money, only in digital form.
It differs from traditional currency because it’s not under the control of a single centralized entity but a conglomeration of all of its users online. The value of the currency is in the hands of the people.
A major advantage of cryptocurrency involves its security measures.
Through a technology called blockchain, transactions are verified and kept in what is essentially a digital ledger written in code, with copies available for anyone to verify that a transaction occurred and is legitimate, rather than one or two people maintaining records.
The amount of cryptocurrency in existence is constantly increasing, as it is generated through a process known as “mining,” where users en masse validate transactions (providing the security) and receive a small amount of newly generated crypto in return.
More and more companies and investors are participating in the use of digital currency every day, making digital currency more than just a method for investing money but an actual viable payment option for participating in online transactions.
Answers to the Top Cryptocurrency Questions
The following are seven questions that beginners in the world of cryptocurrency typically ask. We will provide answers so that you can make the best decisions about using this form of digital currency.
1) What Options Are Available, and What Is Their Value?
There are over ten thousand cryptocurrency options available and more are constantly in development. There are, however, some that are more popular than others. Bitcoin, for instance, has a market cap that is twice that of its closest competitor.
Here are the top 10 cryptos to watch and their approximate value (in billions) to help with evaluating cryptocurrencies:
- Bitcoin: $800+
- Ethereum: $350+
- Cardano: $70+
- Tether: $65+
- Binance Coin: $55+
- XRP: $40+
- Solana $40+
- USD Coin $30+
- Polkadot $25+
- Dogecoin $25+
Be aware that the value of cryptocurrency is constantly fluctuating because it’s a volatile market, which means it typically moves up or down often within a relatively short time span.
Always investigate and research a cryptocurrency before you purchase so that you can make a better investment.
2) Why Are Cryptocurrencies So Popular?
These digital currencies are enjoying blossoming popularity. What about this type of currency is bringing so many new users onboard?
- They are not at the mercy of world governments, which means that, like precious metals, they are not influenced by market inflation, so you could say that cryptocurrency is recession proof.
- Fees associated with using it as an online payment method are significantly lower than other online transaction fees.
- Investors are interested in the potential for profit regardless of whether they consider crypto a viable long-term venture. The value of crypto is increasing, and they want in on the ground floor.
- More online companies are beginning to adopt it as a payment option, making it easier to use than ever before.
- Many people love the security that blockchain provides for transactions.
- With user-friendly methods and processes, it’s surprisingly easy to get.
- Many consumers view it as the evolution of money and expect it to be the future standard for transactions.
3) Should I Invest in Cryptocurrency?
The short answer to this question is: maybe.
Many investors view investing in cryptocurrency as speculating rather than investing because crypto is volatile. In order to make successful investments, stability is required.
That being said, those who purchase crypto can indeed make a profit because of the volatility, but there is a great risk involved. The major issue is that as a form of currency, they do not generate any income. Therefore, for the value of your crypto to improve, someone needs to pay more for the currency than you did.
That makes betting on crypto a risky proposition. With research and a bit of luck, there are substantial opportunities for speculation profits, but for long-term investments, there’s really too much risk for it to be a viable option.
4) How Can I Get Cryptocurrency?
There are a couple of different methods for acquiring crypto. One option is simply to buy some using traditional currency. Here’s how this can be done.
Choose an Exchange Account
An exchange account is simply a platform designed to exchange your traditional money for digital currency. Some of the more popular options are Gemini, Kraken, and Coinbase.
Keep in mind that not all exchanges offer the same cryptocurrencies, so if you are looking to buy a specific one, make sure you research to determine if it will be available on a given platform.
Download a Wallet App
A wallet app functions more or less as a digital bank account for digital money storage. Once you receive your cryptocurrency, a wallet is a safe place you can store it.
Fund the Exchange Account
Use a debit card or connect your bank account to directly transfer money into your exchange account.
Keep in mind that the money provided to this account has not been used for anything until you choose to make use of it. In the meantime, it’s more or less in storage, waiting for you to allocate it.
Purchase Your Chosen Cryptocurrency
Depending on the exchange platform, a buyer can view the current exchange rate and opt to purchase “x” amount of dollars worth of a crypto or can set an option to purchase a specific amount if the rate of exchange reaches a certain desired price.
Whichever the preferred means, once you have acquired the cryptocurrency, do not be surprised if the amount appears as a fraction of a “coin.”
Due to the high value of a single digital coin, crypto transactions typically function this way. For example, your account may show that you possess 0.04 of Bitcoin. The monetary value is the same as what you purchased (until the value increases or decreases), but this is just a representation of what value you own of a standard unit of that currency.
Transfer the Money to Your Wallet App
With ownership of your new cryptocurrency, you are now ready to transfer it to your wallet app for storage so that it’s available when you are ready to use it for purchases or other purposes.
5) Can I Earn Cryptocurrency without Investment?
Here are some methods to receive cryptocurrency without having to spend any of your own money.
- Download wallet apps to receive free tokens
- Join affiliate programs and promote their services
- Use free mining apps allow you to accumulate crypto
- dApps is a freelance style service where you can offer services and receive crypto
- Steemit.com offers opportunities to earn through blog posting and comments
- There are “airdrop” options through wallets but be careful of scam attempts!
- Download wallet apps to receive free tokens
6) Are Cryptocurrencies Legal?
In the United States and most countries, cryptocurrencies are legal.
However, always do a little research for a given country because China, for instance, has made great efforts to ban this type of digital money exchange.
Even Elon Musk has purchased a great volume of Bitcoin so that his company can accept it as a currency medium, spearheading significant interest from other companies and prospective users alike.
Therefore, cryptocurrency is legitimate and is becoming a more viable option every day as more and more companies and users participate in these transactions.
As always, if you have any doubts, research credible resources to determine the truth for yourself or ask an expert in the field.
7) How Do I Protect Myself?
Research is typically the best way to protect yourself while handling cryptocurrency situations.
Make sure you look at the fundamentals of the currency options and determine whether they look like valid investments. Investigate what other investors are saying about a given currency, and when engaging in transactions, make sure you have done your homework on the company you are dealing business with to verify their credentials and security protocols.
There are also cryptocurrency boards that are forming in order to offer some stability in the volatile world of crypto, attempting to make digital currency a more viable alternative for the future.
Be careful and trust your instincts. If something seems too good to be true, it probably is. When in doubt, consult an expert in the field to provide insight into how you can safely enter the world of cryptocurrency trading.
Featured Image: Megapixl