More and more people are looking into new ways of creating an additional income or using cryptocurrencies to make their everyday purchases. However, it can be difficult to know where to start when looking into crypto wallets and how to use them, as well as which currency is best for your needs.
Cryptocurrencies are a new and exciting area of research for many people, with the potential to change the world as we know it. However, before you can understand them, you need to know what they’re made of. This article will explore the various types of cryptocurrencies that you may come across in your exploration into this new and exciting field.
What is Cryptocurrency and the Blockchain
A cryptocurrency is a digital or virtual currency that uses cryptography for security. It’s online money, with computers controlling the money supply, instead of banks. It is quite similar to the stock market where, for example, you consider reaping rewards for staking Glimmer, Moonbeam Collators. It is a parachain that links smart contracts with interoperability on Etherium. The value of a cryptocurrency is determined by the market.
A blockchain is a digital ledger in which transactions made in Bitcoin or another cryptocurrency are recorded chronologically and publicly. Blockchain technology records every event that occurs within its system, so it’s an open distributed ledger that can give secure access to everybody and everything involved in a transaction. Since it is decentralized, it is not controlled or owned by a single entity.
How does it work
The main principle of cryptocurrencies and the Blockchain system is that everything inside such a network is decentralized. However, if someone would like to become part of this ecosystem, they need to get into some virtual wallet where their account will be linked to their ID number. The wallet can be opened with the assistance of an online software solution which you will download onto your computer or mobile device.
Once the wallet is activated, it is time to purchase some digital money using fiat money (e.g., Euro). To do so, you will have to visit one of the online cryptocurrency exchanges where you can also see the current exchange rates and purchase your first crypto coins. The most popular exchanges within the Blockchain system are Bitit, Coinsbank, and Coinbase, among others. However, if you plan on making a massive investment you should use one of the more recognized stock markets such as CoinBase Pro (formerly known as GDAX), Bittrex, BitFinex, BitStamp, or Kraken.
Once you have a digital wallet and some coins in it, the next step is going to one of the Blockchain marketplaces where you will be able to use your new cryptocurrency. There are many sites out there that accept cryptocurrencies as a form of payment for their services or products.
The most popular sites are Expedia, Overstock, Newegg, Shopify Stores, Microsoft Store, and Payza to name a few. Keep in mind that cryptocurrencies are not yet widely accepted all over the world since legislation is still being debated on whether they should be treated as stocks or money.
How to buy, sell, and trade cryptocurrencies
For beginners, you should buy Bitcoins using Coinbase since this cryptocurrency has the highest value. Therefore, you need to purchase them first and then exchange them for any other cryptocurrency. When buying Bitcoins, the most important factor to check is the daily exchange rate since there are many sites where you can store your coins. Once you have bought your Bitcoins, you can start trading them for any other cryptocurrency on the market.
Remember that when trading cryptocurrencies, prices are always changing so it is advisable to follow social media networks or join forums where people post their opinions about different coins. A good option would be the Blockchain community on Steemit since this is a platform where everybody talks about their experience with certain cryptocurrencies. Once you have found out which coin is the most profitable, it’s time to sell your Bitcoins for another cryptocurrency of your choice since one doesn’t always have to hold Bitcoin throughout the trading process.
When selling a certain coin, the procedure remains the same as when buying it but in this case, people are exchanging their Bitcoins for another cryptocurrency. There are many exchanges where you can quickly convert your Bitcoins into any other virtual coin. Some of the most popular include Bittrex, Exmo, Bleutrade, and Cryptopia.
You may also want to know how to create your cryptocurrency
The rising popularity of Blockchain led to the appearance of several cryptocurrencies since no one wants to be left behind on this digital money trend. However, creating your coin is not an easy task since you will have to hire some professional developers who will create a unique code for the new blockchain network.
Once it’s coded, you can start mining your coins by allowing users to download software onto their devices so they could help validate transactions and become, in turn, the owner of a certain amount of your coins. Keep in mind that mining can either be profitable or not depending on how much money you invest into it.
The risks of investing in cryptocurrencies
As with every other type of investment, there are risks out there that can make you lose your money. Let’s take the example of an infamous case back in 2014 when someone went on Reddit to tell his story about how he had invested $5000 into Dogecoin and then lost all of it since he couldn’t sell them.
It is mostly due to the huge volatility of cryptocurrency prices that makes people either lose money or become rich. Dogecoin, for example, was worth $0.00189 back in 2014 when this story took place but since then its value went up to $0.00921 at the time of writing which means that someone could have made half of their investment back.
When it comes to getting started with cryptocurrency, you have to be patient and not jump into buying the most expensive virtual coins since this could lead to dangerous situations where one can lose all of their money. As with any other type of investment, always invest in what you are willing to lose since this is a very risky business.
Nevertheless, if one does their research and learns the ins and outs of the industry, they could make big money by trading cryptocurrencies. While it may seem like this is not for everyone, it is since all you need to know are the basics to buy your first Bitcoins.