Are you left in the dark when conversations on cryptocurrency trading come up? We’ve got you covered.
What is Cryptocurrency?
Before we get too deep into the discussion of trading and investing, let us have a look at what we mean by the term Cryptocurrency. In its simplest form, Cryptocurrency is real digitalized money. It is the “coins” that are on a software platform across computer databases. The main idea behind cryptocurrency is that it improves accessibility and usability of the current system.
Risks of Trading and Investing in Cryptocurrency
There are many cryptocurrencies out there. Here are some thoughts regarding the risks associated with trading and investing in them:
- This is uncharted territory. Some of the early settlers will not succeed, and when they fail, they will take your money with them.
- Whenever there are exponential growth and money making, there are scam artists willingly taking money from the unknowing and undereducated.
- The interfaces aren’t very user-friendly. If you aren’t a technically inclined computer person, you might want to think twice about dipping your toes into the pool.
- This technology is quite new, and there are many unknowns. Reactions in the market to any stimuli/surprises are untested and unknown.
What is a Blockchain?
A blockchain is a type of database. It can be broken up and stored in pieces on many computers all over the world so if breached no whole part is compromised. Because it works on timestamp and transaction data, it is resistant to changes and checks the rest of the blocks to confer if the change is true. Thus, a hacked change to one part of the system would result in a false change and be eliminated.
This type of database eliminates the need for a centralized bank or a centralized computing system to run the system.
How do I buy Cryptocurrencies?
Using an exchange, you purchase your cryptocurrencies with your credit card. You should transfer them to a wallet as soon as you can for storage, as leaving them on the exchange is potentially unsafe.
What is a Wallet/Where do I get a Wallet?
A wallet is an address on the blockchain where you store your cryptocurrencies. Most currencies have their own wallet association. For each of your wallets, there are two addresses: a public address that anyone can use to send money, and a private address that is meant to be used as a password to access money. It is important to keep your private address a secret until you are spending funds, or you are likely to lose your money.
There are a few different options regarding how you store your cryptocurrency.
- Online wallet – Some exchanges have a wallet built in. Online wallets are great for the currency you plan to spend or use to trade. They are not a great long-term strategy for keeping your currency safe and protected.
- Mobile or Desktop wallet – Consider a mobile wallet if you are sure that your phone will never break or be hacked. It is thought to be safer than an online wallet, but if your phone is broken, your funds will be gone.
- Hardware device wallet – These are devices that are built especially for saving cryptocurrency keys, but they are at risk for the things that can damage all electronics.
- Paper wallet – The most hacker-proof is the paper option, but be sure to laminate them or use durable glossy paper and a laser printer and store them somewhere safe.
There is a lot to know to become a master at cryptocurrencies; this is just the basic information to get you started.