Cryptocurrency is a digital currency in which an encryption technique is used to regulate the generation of units of currency and authenticate the transmission and transfer of funds, operating independently from a central bank.
This article provides an overview of what Cryptocurrency is, how to buy Cryptocurrency, where it can be bought online safely, and its pros and cons. This comprehensive guide aims to make new crypto investors more informed about cryptocurrencies and their potential uses in business and personal transactions.
What is Cryptocurrency?
Cryptocurrency can be defined as a digital currency in which encryption methods are used to control the generation of units of currency and authenticate the transfer of funds. Unlike fiat money, Cryptocurrency is not regulated by any central bank or government, making it completely independent and free from political manipulation.
Cryptocurrency was the first-ever digital currency to have the ability to completely bypass banks and payment processors, providing users with complete anonymity and security. Over the past few years, there has been a huge amount of interest in cryptocurrencies, with trading volume soaring as high as $2 billion every day.
Cryptocurrency was first introduced as a form of electronic cash system in 2009 by Satoshi Nakamoto, an anonymous computer programmer who designed Bitcoin. This was the first decentralized Cryptocurrency with a completely digital payment system. Bitcoins were designed to be used as peer-to-peer currency valid between two parties without an intermediary. It was determined by how fast you could calculate hashes and get rewarded.
The next year in 2010, a cryptocurrency called Ethereum was invented, which enabled developers to create other applications on top of its blockchain technology and allowed users to run any application they wished without censorship or fraud. Ethereum has the second-highest market cap among cryptocurrencies after Bitcoin, according to investopedia.
After the invention of Bitcoin and Ethereum, cryptocurrencies started gaining immense popularity, with hundreds of currencies such as Ripple, Peercoin, Namecoin, Litecoin, and many more being introduced to the market.
How does Cryptocurrency Work?
Cryptocurrencies use distributed control as opposed to the central banking systems and centralized electronic money. Decentralized control is related to transactions and issuance of cryptocurrencies, whereas, in centralized banking and financial institutions, the central control has to do with the technology that makes the transaction secure and transfers of funds.
Each Cryptocurrency is unique based on its specifications and unique features. Bitcoin, for example, can only process a limited number of transactions per second due to its design. In contrast, Ripple is faster but intended for smaller transactions.
Another feature differentiating one Cryptocurrency from another is that some have privacy features and some do not.
How Many Cryptocurrencies are there? What are they Worth?
There are currently over 1000 different cryptocurrencies known as altcoins. However, only 92 of them have a market cap of over $1 billion, making them worth more than the dollar.
Some of the most popular and well-known cryptocurrencies include Bitcoin, Ripple, Ethereum, and Litecoin.
Bitcoin is currently the king of all cryptocurrencies with a market cap of $891 billion and its price at $43,436.81, making it the most valuable Cryptocurrency in the world. It is also the pioneer of cryptocurrencies with transaction fees as low as $1 and is the first Cryptocurrency to reach a $800 billion market cap. Due to its popularity and recognition, Bitcoin is being widely used for international payments and provides an instant way to transfer funds from any part of the world to anywhere in the world.
Ethereum has the second uppermost market cap in the world with a price of $3,259.69 and an increasingly high demand for its blockchain technology and smart contracts in the creation of dApps and ICOs.
Ripple is currently ranked third on the list with a market cap of $36 billion and a price at $0.784. It was designed to enable banks to make global transactions by settling payments quickly without any restriction or delay.
However, Ripple is not just a cryptocurrency. It is a real-time gross settlement system (RTGS), currency exchange, and remittance network. It connects banks around the world via RippleNet to provide one frictionless experience to send money globally, which can be converted into different currencies in domestic markets.
Other coins that are gaining popularity include Litecoin and NEM, which are mainly used to send and receive payments, with over a million transactions a day.
Note: All prices are as of 17-Jan-2022.
How do I Invest in Cryptocurrency?
Investing in Cryptocurrency is comparable to investing in traditional stocks. In order to invest in Cryptocurrency, you need to go through an exchange that exchanges your money for crypto assets such as Bitcoin or Litecoin. This can be done online either by creating an account on the exchange– (a service that allows you to legally exchange your fiat currency for crypto or exchange crypto for fiat currency), setting up a wallet, and buying your assets or through a platform that connects buyers and sellers together.
Before investing in Cryptocurrency, it is imperative to ensure that you secure your funds by selecting the right platform. If you are planning to purchase Cryptocurrency online, make sure that the exchange has an excellent customer support and is protected by a strong security system. Also, check if the exchange has been exposed to any hacking in the past, especially if there have been any recent reports about it. Another thing that you may want to check before investing in Cryptocurrency is checking the transaction history of the exchange as well as reviews from people who have already used it before to find out if it is trustworthy. Here are things you can do to ensure that you buy Cryptocurrency the right and safe way:
Choose a crypto trading service or venue that you can trust
Before investing in Cryptocurrency, ensure that you can trust the platform and the people behind it. Checking feedback is an important thing to do when looking at a new exchange. Also, take into account any other comments or suggestions that you might get. It is always advisable to do a bit of research before investing money into a new cryptocurrency. You want to ensure that the company is trustworthy, honest, and has security measures to protect your investment.
Choose the best cryptocurrency exchange
There are lots of cryptocurrency exchanges out there, but how do you know which one to use? There are some ways you can check to get a good idea of how trustworthy a particular exchange is. One way is to find out what other users say about them on social media. Also, review their user rating on sites such as Reddit or Trustpilot or in forums at CoinMarketCap.com. By doing this, you can get a general idea of how good the platform is and if you can trust it. Also, make sure that the company has enough support in the form of customer service.
Make sure you are secure
When you invest online, you have to be aware of the fact that you are putting your trust in a third party and that there may be security issues with this platform. One thing to check is the reputation of the website. Find out if they are safe and secure. Another thing you check is whether or not they support two-factor authentication as well as proper encryption measures such as SSL certification for data encryption.
Search for reviews
It is important to find out what people have actually said about their experiences with the platform. It is wise to search reviews on Reddit, Trustpilot, or Twitter to better understand how trustworthy the exchange is. It helps you avoid having to assemble information about it from different sources and makes sure that you are putting your investment into a known source.
Take necessary precautions
Cryptocurrency is a highly volatile asset and cannot be considered security regardless of what most people may say. You should always invest with the necessary precautions. It is suggested that you do not keep more than you are willing to lose in case the value of your investment drops. This will minimize your losses. Also, make sure that you secure your funds by using a strong password that is difficult to break into and using two-factor authentication instead of just password authentication.
Where Can you Buy Cryptocurrency?
You can buy cryptocurrencies online from different crypto exchanges, such as Coinbase, Gemini, and Kraken. Cryptocurrency exchanges allow you to buy cryptocurrencies such as bitcoin and Ethereum with fiat currencies like USD, EUR, and GBP. There are also over-the-counter (OTC) trading platforms that provide the same services as cryptocurrency exchanges and are used in peer trading between two parties. Some of the popular places to buy Cryptocurrency include:
- Coinbase
- Gemini
- Binance
- Kraken
There are hundreds of cryptocurrency exchanges around the world, all of which facilitate trade and transactions in cryptocurrencies. Each of these exchanges has its own set of rules and regulations, fees, services, and other benefits that may be more or less alluring to different users. This makes it difficult to choose the most reliable exchange platform. To choose the best exchange platform, you must first consider your own needs:
- Ease of Use – Most people start using cryptocurrency exchanges because they are easy to use and navigate. Some platforms provide a user-friendly mobile app that is simple enough for most users to handle.
- Customer Service – Customer service is another reason why most people buy cryptocurrencies on an exchange. There are cases when an exchange goes offline for some reason, and customers cannot access their funds. Therefore, customer service is an important element in choosing the best cryptocurrency exchange platform.
- Fees and Pricing – Some exchanges are more expensive than others. When you decide which exchange to use, it is important to consider the monthly fees you will be paying.
- Security – It is important that you choose an exchange platform with the best security measures in place to prevent any hacks and other security breaches.
- Uniqueness – At the end of the day, it is important to choose an exchange platform that is unique and unlike any other. This will make it easy for you to create a new identity and remain anonymous.
Once you’ve settled on a cryptocurrency exchange that you would like to use, the next step is to determine how much cryptocurrency you would like to invest. This is especially important if you are using a peer-to-peer cryptocurrency exchange platform like coinbase. To help you determine how much bitcoin you are supposed to receive or how much you are supposed to send in fiat currency, it is recommended that you use a Bitcoin Calculator like Paybis. Bitcoin calculators are a simple, and convenient way to estimate how much in fiat currency you will be required to spend to be given a specific amount of the cryptocurrency.
NOTE: Whether you are new to Cryptocurrency or have been involved in the industry for a while, choosing the right exchange platform is incredibly important. It can make it easy or difficult for you to buy cryptocurrencies and store them safely.
How do you Store Cryptocurrency?
Cryptocurrency can be stored in a variety of different wallets. Wallets include cryptocurrency hardware wallets typically used for long-term storage and offline wallets stored on a computer or an online exchange for short-term storage. Each wallet has a different set of security measures, so you must choose one based on your needs and security preferences. These include:
Hardware Wallets – Hardware wallets are cold storage devices built specifically to store cryptocurrencies safely and securely. They are usually small and portable, making them easy to carry around. However, they can be compromised by malware that is designed to steal the private keys of hardware wallets.
Hardware wallets use public-key encryption, which gives them a two-factor authentication method that makes it impossible for hackers to gain access to your cryptocurrency wallet or private keys. They are secured with a PIN that only the owner has access to and require you to confirm every payment or transfer before giving you access.
Online Wallets – Online wallets are secure storage centres for cryptocurrencies offline. However, there are major security concerns that come with online wallets, as hackers can use phishing scams to gain access to your private information and account credentials.
Paper Wallets – Paper wallets are physical copies of a digital wallet on a piece of paper with an identifier and private keys printed on it. When used properly, they provide you with the ability to create backups in case your digital wallet is lost or stolen. However, most people store their cryptocurrencies in a digital wallet and therefore do not need a paper wallet.
TIP: Irrespective of the method you choose to store your cryptocurrencies, it is necessary to take full responsibility for the security of your funds. If you store them in a digital wallet, it will be up to you to keep them safe from hackers and malware. Always use a strong password and two-factor authentication for maximum safety. It is also important that you delete wallets regularly once they are no longer in use, as this will reduce the chances of being hacked.
Frequently Asked Questions
People are becoming more and more fascinated by Cryptocurrency. Cryptocurrency is a non-fiat currency that can be used to make payments in real-time and securely, which is the main reason why most people are so interested in it. Most people spend a large portion of their time online and have access to the internet all around the clock. Cryptocurrencies provide people with an easy way to transact funds as well as store them safely in a digital wallet that is less prone to cyber-attacks and frauds.
You can buy Cryptocurrency from different online stores that list cryptocurrencies for sale. These are typically referred to as online exchanges as well. You can also buy cryptocurrencies from individuals and traders who want to swap their cryptocurrencies for fiat currencies such as USD or EUR. There are also online peer-to-peer trading platforms that allow you to buy Cryptocurrency directly from one another in order to exchange fiat currencies for crypto coins.
The very first thing you should do is to create a cryptocurrency wallet. This is where your Cryptocurrency is stored securely, so you should choose a suitable storage space for your individual needs and requirements. You can buy cryptocurrencies from an online exchange or a P2P trading platform if you want to use them for trading or making purchases. Each form of purchase will require you to register and complete verification processes that are checked by the relevant regulatory body before being accepted.
Cryptocurrencies are a good investment, but there are several factors to take into account before investing in them. Similar to stocks and other forms of investment, cryptocurrencies have the potential to sky-rocket in value or plummet in value. You should purchase cryptocurrencies based on their potential for growth and their market demand rather than on what the price is at any particular point in time.
Cryptocurrency is not physical money but rather a digital asset that has value in the form of a blockchain. The blockchain allows cryptocurrencies to be created, verified, transferred, and stored online. Cryptocurrency can be used to pay for products or services securely and quickly without having to rely on a third-party organization or centralized financial institutions.
