If you’re like many people, you’ve probably heard of cryptocurrency, but you may not know very much about it. The whole concept may seem like a mystery, yet you’re probably interested to learn what the hype is all about. Read on for a brief primer about cryptocurrency that will teach you the basics about this investment opportunity.
What Is Cryptocurrency?
Cryptocurrency is officially a digital asset, a virtual currency that can be used to purchase items or can be saved or traded. Cryptocurrency is generally referred to in terms of “coins” or “tokens,” and it is supported by the blockchain system, which keeps a record of ownership and ensures security. The creation of cryptocurrency is complex, and usually only highly-trained computer programmers can earn it directly. Most people purchase or trade for their cryptocurrency.
What Kinds Are Available?
Cryptocurrency comes in several different varieties. Bitcoin is the earliest and still most popular form of cryptocurrency, but it has been joined by some competitors over the years. Ethereum is one of these, and it can actually handle more complex transactions than Bitcoin. Cardano and Solana are other options. Stablecoins are a newer form of cryptocurrency that are designed to hold their value better than other varieties and to correspond more closely to the dollar.
How Do You Purchase It?
If you are thinking about purchasing cryptocurrency, first do your research. Read more about the various kinds, and decide which one is right for you. Talk to someone who already owns cryptocurrency to get some advice, too.
You’ll also have to decide where to buy your cryptocurrency. A centralized exchange is often a good option for beginners because a third party ensures that transactions are conducted fairly, for a fee of course. You might also work through an online broker. Some deal only in cryptocurrency. Others offer traditional stocks as well.
You can pay for cryptocurrency through a “fiat currency,” like the dollar, and most places allow you to use your credit card for the transaction. As you go deeper into the cryptocurrency world, you might trade one form of coin or token for another to try to increase the value of your holdings. Some sites, like rubix exchange – ripple, focus on trades like this.
How Do You Store It?
When you purchase cryptocurrency, you will need to keep it safe. When your transaction is complete, you’ll receive a private key that proves your ownership, and your cryptocurrency will go into a digital wallet. Many people choose to store their cryptocurrency on the platform they’ve used to purchase it. This is convenient, but you’ll need to make sure that security is tight. More advanced investors use noncustodial wallets either online or offline that provide more security.
How Do You Use It?
Finally, you might be wondering what to do with cryptocurrency. Sometimes you can actually use it to purchase real services or items if companies accept cryptocurrency as payment. Microsoft, for instance, has been accepting payments in cryptocurrency. You might also treat your purchase as an investment, watching to see how it grows in value (or not) and trading accordingly.
Now that you know a little more about cryptocurrency, you’ll be better able to decide if you want to purchase some.