Getting started with cryptocurrency can be a much more difficult ordeal than it should be if you don’t understand the concept behind it. You are exposed to risks of being manipulated by the market and individuals that will try to profit off your lack of knowledge.
In this article, we will share basics of how you can get started with cryptocurrency safely and securely.
How do cryptocurrencies work?
There are too many complexities involved in cryptocurrencies that just to explain completely how the technology works will take too much time. However, we will provide you with a basic understanding of the cryptocurrencies you can invest in.
There are different types of cryptocurrencies in the market. Be it Bitcoin, Litecoin, Ehterum or many of the other cryptocurrencies available in the market, the concept behind them is the same.
For each of these cryptocurrencies, there is a set amount. To mine cryptocurrencies, you can use your computer which functions as a gatekeeper. To buy or sell, more than 50% of the gatekeepers need to approve the transaction.
The reason why cryptocurrencies have earned its fame today is because its system is transparent and secure. Furthermore, cryptocurrencies have a decentralized system. The entire world’s currencies are governed or pegged to another main currency.
It runs wholly on the system of supply and demand. Keep in mind that you can make and lose a lot of money mining cryptocurrencies.
Why should you get into cryptocurrencies?
There are a few reasons why you should get started with cryptocurrencies.
With different cryptocurrencies you can invest in such as Bitcoin, Litecoin, and other altcoins, you can gain your investment back and more. Many people diversify their investments by putting money in different cryptocurrencies hoping that any one of these currencies will explode the way Bitcoin did.
Centralized decentralized market
Many people today do not believe that the money market should not be centralized. This is why when Bitcoin came up, many people rushed to enter the market as it is a decentralized currency.
People stand to make more out of their investment in a decentralized market.
Ease of transaction
Did you know that it is much easier to change large sums of money with the use of cryptocurrencies rather than using a bank? Furthermore, the transactional fees are also much cheaper using cryptocurrencies.
In Bitcoin, many people invest in it because there are over 21 million coins that can be mined today. With Bitcoin, there is a set number of coins which means that inflation rates are non-existent.
How can you start investing in cryptocurrencies?
There are two main ways that you can get started. Firstly, the cryptocurrencies allow you to send them directly from one wallet to another.
The second method is where you can buy or sell from a cryptocurrency exchange which is equivalent to trading stocks.
For the sake of simplicity, let’s say you decide to buy on an exchange. Once you have decided which cryptocurrency you want, you will then buy or sell at a certain price. Then, you will indicate the public key.
In short, the public key is similar to a holding account. It serves as an indicator, so people know which account to send the currency to.
You will also have an encrypted public key which is another layer of protection on your holding account. Decryption can only occur when the transaction is executed.
This process happens behind the scenes. Therefore, you don’t have to worry about the decryption process.
Choosing & setting up your wallet
Trading cryptocurrencies are very much similar to trading stocks with regular currencies. You also need a place to keep your money. With cryptocurrencies, you need to keep it in a wallet.
Depending on your needs, this wallet can be online or offline. You can choose to place it on a special encrypted USB with Ledger. For desktop users, you can use Electrum. If you choose to maintain an online wallet, several options are Blockchain and Bittrex.
Once you have decided which wallet to go for, one thing to keep in mind is your key phrase. Usually, this is made up of 12 random words which will be used to regain access to your funds if you forgot your login credentials.
This key phrase is essential. Take note of it and keep it somewhere safe that no one can easily have access to it.
Cryptocurrencies you can explore
Now that you’ve decided the wallet you want, it’s time to invest in some coins. There’s always something new to invest in with more alternative coins coming up on the market.
Here are a select few cryptocurrencies that you can keep an eye on.
- Bitcoin – Extremely strong cryptocurrency.
- Litecoin – Stable cryptocurrency which is used for international money transfers.
- Ethereum – One of the fastest growing cryptocurrency.
- Ripple – Relatively new cryptocurrency. Serves as a platform for currency exchange.
There are still plenty of other cryptocurrencies that you can explore out there such as Dash, Maid Safe, Storj, and Steem. Innovative currencies are also coming up which offers services to appeal to potential investors.
Whatever cryptocurrencies you’re looking to get into, keep in mind that the liquidity is the most important as it will come in handy during depreciation periods. If you want to see an in depth analysis of which cryptocurrencies are the most profitable, this guide will help you to identify the most profitable options besides Bitcoin.
You’ve set up your wallet and invested in cryptocurrencies. You will most probably have a strategy in place as well. Regardless of your strategy, it is important to monitor your investments.
Unlike regular currencies on stock exchanges, cryptocurrencies can fluctuate drastically in the matter of days.
Check your investments at least once a week or sign up for price alerts to keep yourself updated. Monitor your investments and remember to always keep your key phrase somewhere safe.
What is the future of cryptocurrencies?
The blockchain technology beind cryptocurrencies will only grow drastically from here onwards. More banks are adopting this technology and making way for it in their systems. The same also applies to stock exchanges.
Are you ready to get started? We understand that trying to fully comprehend cryptocurrencies can be difficult with just one article.
Using this guide, you can learn how to make real money with cryptocurrencies and gain access to insider insights about the best strategies in the market. Get started today!