Investing in Cryptocurrency - The Basics

Investing in Cryptocurrency - The Basics

. 3 min read

With the increased interest in cryptocurrencies, it’s not surprising that many investors are looking to get their hands on some digital coins. While this may seem like an easy way to make money, it’s far riskier than you think. If you want to get involved with cryptocurrencies but don’t know where to start, this article is for you. You’ll learn what cryptocurrencies are, the types of investors that buy them, and the key points you need to know about investing in them.

What is a Cryptocurrency?

A cryptocurrency is a digital or virtual currency designed to function as a medium of exchange that doesn’t rely on banks or governmental backing. Benefits of a decentralized currency (crypto) include fewer processing fees, greater privacy, and increased control over financial transactions. The main drawback of crypto is that it doesn’t have a central authority that oversees transactions and sets currency values. Instead, cryptocurrencies rely on a network of decentralized computers to maintain their value. These computers are operated by users who solve complex mathematical equations using GPU power to maintain the general ledger of the currency.

How to Buy Cryptocurrencies

Many online exchanges enable you to buy and sell cryptocurrencies using traditional currency (like USD or EUR). Coinbase is one of the most popular. It’s easy to use and offers a wide range of payment options, including a cryptocurrency-only credit card. If you want to buy other cryptocurrencies, you can use a crypto trading platform. These allow you to trade one cryptocurrency for another and buy and sell crypto directly from other users. Some trading platforms also allow you to buy cryptocurrency to bolster your holdings without spending a single coin.

The Different Types of Investors in Cryptocurrencies

Investors buy cryptocurrencies, intending to profit by selling them at a higher price. There are three main types of investors in cryptocurrencies: speculators, HODLers, and investors. Speculators buy cryptocurrencies with the hopes of selling them for a higher price at a later date. They’re usually waiting for the price to rise, and they don’t care how. HODLers, on the other hand, buy and hold cryptocurrencies. They believe that the price of a cryptocurrency will only go up and that they will be able to sell them for a higher price at some point in the future.

Key Things to Know Before Investing in Cryptocurrencies

Before diving headfirst into the world of cryptocurrencies, there are a handful of things you need to know. First, it’s important to note that this isn’t a bit of investment advice. You shouldn’t invest money that you can’t afford to lose. Cryptocurrencies are volatile, and prices are unpredictable, which makes them risky. Second, you need to understand the differences between a coin and a token. A coin is a cryptocurrency that is designated as being used as a medium of exchange. Bitcoin, Ethereum, and Litecoin are all examples of coins. On the other hand, a token is a coin that operates as a network service. These tokens may be used to access a product or service, like paying for content or holding credits that can be exchanged for goods or services.

Conclusion

Investing in cryptocurrencies can be very exciting, but it’s important to approach it carefully. The market is new and volatile, and prices can change quickly. Before investing a significant amount of money, it’s good to research different types of cryptocurrency wallets and learn about key points to consider when investing in cryptocurrencies.



Mark

Part of the expertEasy team in Melbourne. Mark is a keen gardener, a DIY addict and a father of two beautiful girls. He is originally from Perth and is a true Eagles fan.

About expertEasy

Live in Australia? Whether you need your lawn mowed, your garden landscaped, your home painted, or you need a photographer, expertEasy is the easy way to find expert help.

Find the right expert