Things To Know Before Investing In Cryptocurrency
It is easy to follow trends. No matter how much you try to stay out of the recent news, the biggest trends will always find you, and cryptocurrency is no exception.
How much do you know about this popular term? Do you know what does it stand for?
If so, have you ever considered investing in it? If your answer is yes, here is what you should know before you place your money into this currency.
Cryptocurrencies are digital assets people use to purchase online or to invest in something. To use cryptocurrencies, you will need coins or tokens of a specific cryptocurrency.
There isn’t one but many cryptocurrencies, with Bitcoin being the most popular one.
Other famous cryptocurrencies are:
- Bitcoin Cash
- Libra (this cryptocurrency is owned by Facebook)
The term itself cryptocurrencies stand for ‘ the art of writing or solving codes.’
Put in plain language, each coin is a unique line of code, therefore, they cannot be duplicated. As such, they are easy to track and identify as they’re traded.
How Does Cryptocurrency Work?
Cryptocurrencies are exchanged from person to person, without a middlemen. With cryptocurrencies, you won’t have to deal with institutions like a bank or government.
Cryptocurrencies are decentralized, and as such, no one can control their production, their value, or how they are exchanged.
To use them you should store them in your digital wallet, usually in an app.
You will get a digital key, a private key, with a unique code that you enter in order to digitally ‘sign off’ on purchases. This is mathematical proof the exchange was valid, that it was legit.
All crypto operates on blockchain technology.
What is a blockchain? A blockchain is similar to a long receipt that keeps growing with each exchange.
In a way, blockchain is a public record of all of the transactions that have ever happened in a specific cryptocurrency.
What Can You Buy With Cryptocurrency?
Today, people see cryptocurrency more as an investment, than a means to shop. However, there are online retailers that do accept crypto, such as overstock.com
Even major retailers, such as Whole Foods, are experimenting with Bitcoin as a valid source of payment.
Here is what you should know before investing in cryptocurrency:
- Cryptocurrency are still unknown
- They can be used for numerous fraudulent activities
- Cryptocurrency doesn’t have an unproven rate of return
Should You Invest?
This depends on you entirely. You should do your research first.
Follow blogs on the topic, vlogs, explore relevant written sources, and do a test – if you can’t explain to a 10-year-old what a cryptocurrency is, you are probably not ready yet to invest in cryptocurrency.