Cryptocurrency Beginner's Guide
You have probably heard of cryptocurrencies and how that they are just about to kill banks the same way e-mail killed the post office. Chances are though that you still do not know how to acquire and make use of one. The good news is that you are not alone. Below is the complete beginner’s guide to cryptocurrency investing.
Indeed, this novel idea is still in its infancy by virtue of having come into existence only recently in 2009 (according to Wikipedia). Considering the important role it is expected to play in global commerce in the coming years, you have no choice but to get to know it deeply. We draft this article with that very purpose in mind.
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How to invest in Cryptocurrency 2021 - Beginner's Guide
Below are some of the things you may have to know about cryptocurrencies as a beginner:
#1: Definition
Cryptocurrency is a kind of digital currency that is used to purchase goods and services. Unlike the ordinary fiat currency, this does not exist in the form of notes and coins. Instead, it exists in the online platform and also makes use of a digital ledger to facilitate the flow of the transactions. It is nonetheless redeemable in the form of hard cash.
#2: How cryptocurrency works
Each company or entity involved in the online transactions issues its own currency called a token. The currencies are distributed via a network called blockchains. Each blockchain is decentralized and spread out across many computer networks that manage and record each transaction that passes through it.
#3: The number and sum total worth of cryptocurrencies
CoinMarketCap.com, a market research website, estimates that there are well over 6,700 cryptocurrencies that are traded publicly. As of April 2021, the total value of cryptocurrencies stood at around $2.2 trillion. Bitcoin, according to the same market research, stands as the priciest crypto. Its value is roughly $1.2 trillion.
#4: The leading cryptocurrencies by market capitalization
CoinMarketCap further identifies the following as the leading cryptocurrencies on the market:
- Bitcoin – $1.2 trillion
- Ethereum – $263.4 billion
- Binance coin – $87 billion
- XRP – $81.8 billion
- Tether – $45.4 billion
- Cardano – $44.7 billion
- Polkadot – $39.3 billion
- Uniswap – $18.8 billion
- Litecoin – $18.1 billion
- Stellar – $14.9 billion
#5: Reasons behind the popularity of cryptocurrencies
Even though this form of currency has been around for only a short duration of time, it is exceedingly popular. This is informed by so many reasons. Here now we identify those reasons and how they possibly contribute to the popularity of this crypto:
Futuristic
Most people hail this as the future of commerce and transactions. For this reason, many are scrambling to get to acquire them or at least know more about them. This sudden surge in the interest of the currency has also contributed to the sharp increase in the value altogether.
Minimal regulations
Unlike ordinary currencies, the cryptos do not have to be regulated by a central bank. In light of this, the currency is more convenient to handle and make use of. Also, the lack of regulations reduces the fees levied on the currency and makes it cheaper, on the whole, to transact with.
Decentralized processing
Other than minimal regulations, this form of currency is also decentralized meaning that no one person has absolute authority and control over it. On the strength of the decentralized nature of the crypto, it is more secure and private than the other fiat currencies.
Highly speculative
All trends point to an upward value of the tokens altogether. Many speculators have therefore resorted to hoarding the crypto with the goal of making a kill via the interest earnings that come along. With increased adoption comes a spike in the overall value of the crypto altogether.
#6: How to purchase the cryptocurrency
To purchase the cryptocurrencies, you have to follow the steps outlined and explained here below:
Step I: Acquire a digital wallet
Start by acquiring a digital wallet. This is the repository in which you will deposit your cryptos. We recommend that you acquire a cross-platform wallet that is able to work across and along with many cryptocurrency platforms. The Exodus is by far the most suitable wallet to acquire.
Step II: Inter-link your bank account with the wallet
Now, inter-link your bank account to the wallet you have already acquired. This linking is what allows you to shuffle your cryptos from your bank accounts to your wallets and back as need be.
Not all banks support this functionality though. You have to be sure that yours does support it.
Step III: Purchase the cryptos
Get to the core of purchasing the cryptos now. At this stage, you have to specify how much of the cryptos you would wish to purchase. Then, order the platform via which you are purchasing to transmit the same to your wallet. You may have to check the values of the cryptos before embarking on a purchase for the best deals.
Step IV: Withdraw the crypto in form of hard cash
If you so wish, you may withdraw the cryptos in the form of hard cash. For this to happen, you have to transmit the same from your wallet to your bank account. Then, go ahead now and ask your bank account to convert the same in the form of hard cash that may be subsequently withdrawn via ATM.
#7: Online cryptocurrency brokers
You might need some online cryptocurrency brokers to acquire and deal in the cryptos. NerdWallet, an online market research site identifies the following as the leading online cryptocurrency brokers:
Other notable examples are Binance, Crypto.com for Exchange, Exodus – Software Wallet, and BlockFi – Crypto Lending.
#8: Common cryptocurrency terms
Below are some common terms you will encounter while engaging the cryptocurrencies:
- Trading – Refers to the act of buying and selling cryptocurrencies across several platforms.
- Futures trading – It is an agreement between a buyer and a seller that mandates the former to purchase a given volume of cryptocurrency at an agreed-upon price on a future date.
- Hodl – This is a situation in which a trader chooses to hold onto his cryptocurrency regardless of the prevailing market conditions. It is mainly implemented as a way of speculating.
- Lending – The action of advancing some cryptocurrencies to a third party, called a lender, to be refunded at a later date for a profit.
- Staking – Actively validates the cryptos on the blockchain. The validators are entitled to certain rewards while the entire process also makes the cryptocurrencies safer and more secure to work with.
CONCLUSION
With the insights we have provided you above, we are now confident that you have what it takes to start out well in the trade and distribution of the cryptos. Move now with confidence and implement the insights you have received to the latter.
Needless to say, the information we have provided is the very basic that the topic has. It is now up to you to move ahead and carry out more in-depth research into the subject matter and get to know more about it. When exactly do you plan to venture out into the purchase of these tokens? Let us hear from you below…