The popularity of cryptocurrency has risen immensely in the past few years since some digital currencies have gained huge value. Today, investors across communities are investing in cryptocurrencies, thanks to their remarkable returns.
But are you aware of the basics of cryptocurrency?
Before you start investing in cryptocurrencies, it is crucial that you should be aware of their terminology. An investor without knowing the basics of the asset he is buying can end up losing everything.
Successful crypto investors tell people to comprehensively study cryptocurrencies when they decide to buy them. These digital currencies are not supported by any central authorities or government regulations, and you have to be careful while trading them.
Let us find out the basics of cryptocurrencies to help you understand them effectively.
What is Cryptocurrency?
Launched in 2009 with Bitcoin (BTC), cryptocurrency was an unpopular phenomenon, and many financial experts believed it to be a failure. But the financial crisis of 2008 forced many to think to find a better solution to the challenges posed by the existing traditional financial system.
Cryptocurrency has withstood the test of time and shown the potential of changing the concept of money and investment. Bitcoin has become the world’s largest cryptocurrency in the past few years by market capitalization, thanks to its profitability and enhanced security.
In addition, over 10,000 cryptocurrencies are available that provide a remarkable opportunity for investors who cannot afford BTC. You can either buy Ethereum (ETH) or can invest your money in another coin like Tether.
Cryptocurrencies exist online on blockchain technology where their transactions are recorded permanently on a publicly distributed ledger. They are protected by cryptography and are remarkably secure.
As a crypto investor, you are free from bank or government regulations since cryptocurrencies are decentralized currencies. No one can interfere with your crypto wealth, and you are its sole owner and manager.
Carl Runefelt, alias, The Moon, is a global crypto leader who is pushing for the mass adoption of cryptocurrency.
He says, “Gold is much better than fiat, but even then, Bitcoin has a huge advantage. This is because gold has a supply that is increasing very slowly, but it is increasing. Bitcoin is finite, so there is a small advantage there. You can transfer Bitcoin with a click of a button. But if I have to send a million dollars to gold to another country, it’ll cost me maybe more than the gold itself – the bigger the number, the harder to send.”
Benefits of Investing in Cryptocurrency
Cryptocurrency investments are increasing with each passing day, thanks to their multiple benefits. You can buy cryptocurrencies through a crypto exchange where many digital currencies can be traded.
Here are some of the benefits of buying cryptocurrency.
- Crypto transactions are quick since they are supported by blockchain technology that is always working.
- The fees of crypto transactions are fewer as compared to bank transactions.
- You can send or receive cryptocurrency at any time anywhere across the globe.
- Anyone can access cryptocurrency which is a major problem with fiat or traditional currency.
- Cryptocurrencies are protected by cryptography which significantly reduces the chances of fraud.
- You can buy multiple cryptocurrencies and there is no limit to it.
- Cryptocurrency is designed to provide an inflation hedge since its supply is controlled.
Things to Remember When Buying Cryptocurrency
When you think about investing in cryptocurrency, you should be careful about some important things.
Carl, on his YouTube channel, The Moon, says, “The price of bitcoin keeps changing every second, and for new investors, it is necessary to understand the reason behind these changes. Examining its history or the factors that influence the rise and fall of bitcoin, everything must be studied.”
You should follow the following tips:
- Understand cryptocurrency comprehensively before you start investing.
- Closely watch the crypto volatility and take each decision carefully.
- Never invest in cryptocurrency more than you can easily afford to lose.
- Follow different strategies to manage the risk of crypto trade since price fluctuations are normal.
- You should invest in multiple cryptocurrencies as this would help you have a diverse crypto portfolio, and you can avoid losses.
The concept of investment has amazingly changed by cryptocurrencies since investors are investing in digital currencies largely.
But to become a successful crypto investor, you should be aware of the basics of cryptocurrency.
You can follow the above-mentioned information to start comprehensively investing in cryptocurrency.