A beginner's guide to cryptocurrency

WHAT IS CRYPTOCURRENCY?

A cryptocurrency (or "crypto") is a digital asset that can be exchanged without the use of a central monetary authority such as a government or bank. Cryptocurrencies, on the other hand, are created using cryptographic processes that allow users to safely buy, sell, and trade them.

Cryptocurrency is a digital asset in basic terms. The term comes from the fact that all of its transactions are highly encrypted, ensuring that the transactions are safe. It is decentralized, unlike traditional currencies, which are regulated and controlled by a central entity. A cryptocurrency's supply is limited, and it is sometimes compared to precious metals such as gold and silver.

Blockchain is the technology that underpins Bitcoin and most other cryptocurrencies. It creates a tamper-proof record of transactions and keeps track of who owns what. Blockchains solved a problem that past attempts to create completely digital currencies had: prohibiting people from duplicating their holdings and trying to spend them twice.

Mining, which is a process in which powerful computers tackle incredibly difficult tasks in exchange for a reward for completing successful cryptocurrency transactions, is how Bitcoin is created. To put it another way, bitcoin transactions regularly result in the emergence of new coins on the market.

Many cryptocurrencies utilize the blockchain to monitor and record transactions, making it a highly safe system for your money. Blockchain allows multiple entities to maintain identical transaction records, making it a highly secure system for your money.

The Cryptocurrency Market

The cryptocurrency market is valued at $1.7 trillion as of May 2021. At the time of writing, there are over 10,000 cryptocurrencies listed, and the number is only going to grow. Bitcoin, with a market capitalization of almost $650 billion, holds the largest share of this, followed by Ethereum and Tether.

Cryptocurrencies have been gaining popularity around the world for some years. For example, in 2014, when Overstock.com, a well-known US online retailer, began accepting Bitcoins, it made $124,000 in Bitcoin sales on the first day alone. More interestingly, organizations are recognizing the worth of Bitcoin as an investment — MicroStrategy Inc., situated in the United States, purchased more than $1 billion in Bitcoin in 2017

Bitcoin is a game-changing technology

After the 2008 financial crisis, the globe realized issues with conventional banking systems, and Bitcoin arose as a gold rush of potential. It was the first cryptocurrency to use blockchain technology, and it has the potential to change how people think about money. Bitcoin was named the greatest investment in 2013 by Forbes. It has now become a household name.

According to Deloitte, over 2300 US businesses accepted Bitcoin as a form of payment in late 2020, making it a desirable asset for the common person to acquire.

Why Should You Invest in Bitcoin?

Bitcoin is a peer-to-peer (P2P) currency, which means there is no middleman (such as a bank or credit card company) and transaction costs are cheap.

It is speedy and entirely transparent – for example, every Bitcoin transaction is recorded in a public ledger that is accessible to the public. It is impossible to forge or counterfeit. Because blockchain transactions are irreversible, the possibilities of fraud are reduced even further, and your money is extremely safer. Bitcoin may be traded on exchanges like WazirX, which provides a safe and secure environment for investors.

Why Should You Invest in Bitcoin? Bitcoin is a peer-to-peer (P2P) currency, which means there is no middleman (such as a bank or credit card company) and transaction costs are cheap. If you're new to the crypto world, figuring out how to get Bitcoin, Dogecoin, Ethereum, and other cryptocurrencies can be challenging. Thankfully, learning the ropes is rather simple. Following these simple steps, you can begin investing in cryptocurrency.

1)Choose a store to purchase it from There are a variety of secure ways to purchase bitcoin, but a centralized exchange is likely to be the most accessible for newcomers. Customers can have faith that they are getting what they paid for because centralized exchanges operate as a third-party regulating transaction. These exchanges earn money by collecting fees for various services and selling cryptocurrency at market rates. If you're used to traditional brokerage accounts, there are a few online brokers that provide access to both bitcoin and equities. NerdWallet examined online brokers such as Robinhood, Webull, SoFi Active Investing, and TradeStation. If you're looking for a cryptocurrency exchange that solely deals with cryptocurrencies, look for pure-play cryptocurrency exchanges. These platforms, like Coinbase, Gemini, and Kraken, don't offer basic assets like stocks and bonds, but they usually have a larger selection of cryptocurrencies and more on-platform crypto storage choices.

Though centralized exchanges are simple to use, the volume of crypto that passes through them makes them a tempting target for hackers. There are decentralized exchanges for more advanced users, with fees that are often lower than those paid by centralized systems. These are harder to utilize and need more technical expertise, but they may provide some security benefits because no one target for a cyberattack exists. Another option to trade bitcoins is through peer-to-peer transactions.

2)Make a new account and verify it Once you've chosen a cryptocurrency broker or exchange, you can open an account with them. Depending on the platform and the quantity you want to buy, you may be asked to show identification. This is an important step in preventing fraud and adhering to legal guidelines. Until the verification procedure is completed, you may not be able to buy or trade cryptocurrencies. You may be required to produce a copy of your driver's license or passport, as well as a selfie to verify that your appearance matches the documentation you submit.

3)Increase the value of your account Depending on how you wish to pay, you may need to fund your account before purchasing any cryptocurrencies. If you're using fiat currency, most exchanges allow debit and bank transfers. Some even allow you to pay using your credit card, though this can be risky when dealing with a volatile asset like bitcoin because interest charges can compound your losses if your assets lose value. If you already have bitcoin, you can deposit it into your account using a digital wallet or another platform, and then trade it. Just make sure your crypto exchange supports trading between the assets you're considering. Not all cryptocurrencies can be traded for one other directly, and there are more trading pairs on some platforms than on others. Another thing to keep in mind is that exchange fees differ based on what you're buying and how you're buying it, so double-check these facts.

4)Choose a digital currency. There are a variety of cryptocurrency investing options available, but none of them will be ideal for everyone. Consider what you want to receive out of this investment before you buy. Do you anticipate it appreciating in value? Do you wish to conduct transactions using cryptocurrencies? Do you wish to create decentralized apps using the underlying technology? These might help you make your decision. NerdWallet includes instructions for a variety of prominent cryptocurrencies, including Bitcoin and other Bitcoin alternatives:

• The first and most valued cryptocurrency is Bitcoin.
• Ethereum is widely used to carry out more complicated financial transactions than Bitcoin allows.
• Cardano is a cryptocurrency that competes with Ethereum and is led by one of its co-founders.
• Solana is another Ethereum competitor that focuses on speed and cost-effectiveness.
• Dogecoin started out as a joke and has since grown to be one of the most valuable cryptocurrencies.
• Stablecoins are a type of cryptocurrency whose value is intended to remain constant in comparison to real-world assets like the dollar.

5)Make a Cryptocurrency Purchase After you've deposited funds into your account, you're ready to place your first crypto-currency order. There are hundreds of cryptocurrencies to choose from, including well-known coins such as Bitcoin and Ethereum, as well as lesser-known coins such as Theta Fuel and Holo.

When you've decided which cryptocurrency to buy, type in its ticker symbol (Bitcoin's is BTC) and the number of coins you want to buy. On most exchanges and brokers, you may buy fractional shares of cryptocurrency, allowing you to buy a sliver of high-priced tokens like Bitcoin or Ethereum that would otherwise cost thousands of dollars. The following are the symbols for the top ten cryptocurrencies by market capitalization*:

• Bitcoin (BTC)
• Ethereum (ETH)
• Tether (USDT)
• Binance Coin (BNB)
• Cardano (ADA)
• Dogecoin (DOGE)
• XRP (XRP)
• USD Coin (USDC)
• Polkadot (DOT)
• Uniswap (UNI)

6)Choose a Method of Storage Cryptocurrency exchanges are not insured by the Federal Deposit Insurance Corporation (FDIC), therefore they are vulnerable to theft and hacking. If you forget or lose the codes to access your account, you risk losing your entire investment, as millions of dollars in Bitcoin have already been lost. That's why having a safe place to store your cryptocurrencies is critical. If you buy bitcoin through a broker, you may have little to no control over how your cryptocurrency is stored, as previously stated. You have more possibilities if you buy cryptocurrency through an exchange:

a)Keep your cryptocurrency on the exchange. When you purchase bitcoin, it is usually stored in a crypto wallet linked to the exchange. You can take your cryptocurrency off of the exchange to a separate hot or cold wallet if you don't like the provider your exchange works with or want to relocate it to a more secure location. You may have to pay a small fee depending on the currency rate and the size of your transfer

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b)Wallets that are hot. These are online crypto wallets that run on internet-connected devices including tablets, PCs, and phones. Hot wallets are convenient, but because they're still connected to the internet, they're more vulnerable to theft.

c)Wallets that are cold. Because cold crypto wallets aren't connected to the internet, they're the safest way to store cryptocurrency. External devices, such as a USB drive or a hard drive, are used. Cold wallets, on the other hand, must be used with caution: if you lose the keycode connected with them, or if the device breaks or fails, you may never be able to recover your bitcoin. While this could happen with certain hot wallets, some are maintained by custodians who can assist you in regaining access to your account if you become locked out.

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