One of the most popular financial assets to invest in right now is cryptocurrency. These assets are created with blockchain technology that more or less serves the same purpose as traditional money including purchasing items. Like foreign exchange, crypto coins can also be traded for other currencies for profit.
While there are some critiques about its stability, there’s no doubt that many financial institutions are slowly warming up to the idea of trading crypto coins with security assets and regulations already in the works of various governments and financial institutions. Cryptocurrency investing is really something that traders all around the world are considering.
To start a probable career, here’s a guide on cryptocurrency investing for beginners:
What is Cryptocurrency?
Cryptocurrency or crypto coins are digital coins that serve the same function as traditional money which can be used to purchase items and other assets. However, unlike traditional coins, crypto coins don’t have a physical form and instead are run by blockchain technology.
Blockchain is like a digital ledger where it comprises of the coin’s entire history including its transactions from the very beginning.
When it comes to storing your cryptocurrency, you would also need a wallet much like your own local currency. However, crypto coins are different from traditional money because it’s decentralized, which means that no single authority is responsible for its circulation. Its unregulated and decentralized nature contributes to its volatile and fluctuating value, but it also means that it’s open for everyone to invest into.
What are the different kinds of cryptocurrency?
According to Coin Market Cap, there’s at least 2,125 crypto coins currently available in the market. However, not all crypto coins are the same since certain types are more in demand than others. To start, here’s a list of the most commonly traded crypto coins today:
1. Bitcoin (BTC)
Bitcoin or BTC is considered as the original cryptocurrency, Bitcoin uses blockchain technology to make transparent transactions between parties. While they’re easily accessible, their features are also secured by an added algorithm which prevents malicious hackers from destroying the blockchain feature.
Bitcoin is considered to be the predecessor of all other cryptocurrencies, which is why the other crypto coins are called altcoins or alternative coins. Basically, these are alternative currencies to Bitcoin; however, these altcoins aren’t inferior in terms of blockchain technology and usability or function.
2. Litecoin (LTC)
Litecoin or LTC is an alternative of BTC which includes starking differences in features. Some of which include:
- Faster transaction speed
- An 84 million limit
- A different algorithm called scrypt
3. Ethereum (ETH)
Ethereum or ETH are digital coins primarily focusing on running and validating the programming code of any decentralized application, allowing it to be used in paying fees and other services on its own network. Ethereum is the most commonly used coin when dealing with ICOs or Initial Coin Offerings because its blockchain technology allows the use of smart contracts.
4. Ripple (XRP)
Ripple or XRP is a unique hybrid that is both a cryptocoin and a payment network for various institutions. They allow any currency to be exchanged which can range from USD, EUR, and even gold to connect to banks. However, unlike other crypto coins, Ripple doesn’t focus on peer-to-peer sharing but instead on moving sums of money to a larger institution.
Each of which share similar decentralized nature but have different components for several purposes.
How do I start investing in cryptocurrency?
After deciding on which cryptocurrency you should start dealing with as well as researching on the different investments you want to make. Here are the steps you need to start:
1. Start exchanging from platforms where you can buy crypto coins
Depending on the country you’re from, there are various sites that allow you to purchase Bitcoin, Ethereum, and other digital coins. Before starting, make sure it’s legal in your country since certain governments are still wary of trading crypto coins. If you can’t find sites that sell cryptocoins, consider peer-to-peer platforms like:
Some Forex platforms also allow cryptocurrency trading so be on the lookout for those, as well.
2. Secure your coins in your cryptocurrency wallet
A cryptocurrency wallet is software that allows you to store your digital coins. Certain wallets also contain features like advanced security, key generation and easy transfer. Like cryptocurrency, digital coin wallets also come in different categories such as:
- Software wallets – these are downloadable programs that are required to be installed in your computer or device.
- Desktop – desktop wallets are software wallets that allow you to store your crypto coins in your laptop or computer. Certain wallets may contain online features although most desktop wallets don’t.
- Online – online wallets are cloud software wallets that require internet connection so you can access your account as well as make various online transactions.
- Mobile – these wallets are downloadable mobile apps that allow you to check your balance and other transactions on your phone everywhere you go.
- Hardware wallets – unlike software wallets, hardware wallets are physical storage devices used to store some of your keys. They’re versatile and can be connected online although many are often used to keep investments away for a long time.
- Paper wallets – are offline software that allows users to store their keys, generate copies, as well as store their cryptocurrency addresses on paper.
Each wallet serves a specific purpose depending on the investment you intend to do. The wallets also vary in price, functionality and security. The more you use your cryptocurrencies, the hotter your wallet should be. If you prioritize security and long-term use above all else, invest in a durable hardware wallet.
Cryptocurrencies are considered a hot investment item because they possess the convenience of today’s technological innovation. With so many options available, many investors can expand their portfolio by choosing more than one kind of coin. To avoid risks, investors should also invest in security items to keep their assets safe.
crypto is coming!
Interested in more crypto content? Check out Police Still on the Cryptopia Hack, They Claim another Quarter Million Dollars Have Been Hacked and Why Privacy Coins are important in 2019 and beyond