This article will introduce how to get into cryptocurrency by answering four how-to questions new traders need to ask themselves. These questions are: cryptocurrency how does it work? How to get cryptocurrency? How to use cryptocurrency? How to get a cryptocurrency wallet? Once all these questions have been answered, you will be on your way to be a full-fledged crypto trader.
Q: Cryptocurrency how does it work?
A: It’s all over the internet, you hear your friends talking about it, see it on ads, buses, and televisions, but you’re still wondering; Cryptocurrency how does it work?
Cryptocurrencies are a new type of digital currencies that started with Bitcoin in 2008 and have now span over 1500 different denominations. Cryptocurrencies use a new technology called blockchain to provide border-less, deflationary, low transaction, near instantaneous transfers.
The main idea behind the creation of Bitcoin was the creation of a currency that was not regulated by the government and was truly owned by the holders. The normal national currencies are controlled by central organizations that can manipulate the price, meaning they could announce that your entire wealth is worth zero tomorrow if they wanted. Bitcoin can escape this fate by giving control to the entire community through blockchain mining, the cryptocurrency also comes with a limited max supply making it a deflationary currency. It was created to be a peer-to-peer electronic cash.
Nowadays, cryptocurrencies, while all using the same blockchain technology, come in a variety of forms, features, and goals but two main categories exist the coins and stablecoins. Stablecoins are pegged to a real-world asset, for example, USD to the TUSD stablecoin, making it only as volatile as said real-world asset. Coins, on the contrary, are purely speculative currencies and not backed by real-world assets making them highly volatile.
Q: How to get cryptocurrency?
A: Every self-respecting crypto-enthusiast must learn how to get cryptocurrency, at which price, and from where. The three major ways are to buy, mine, and receive.
Buying cryptocurrency like Bitcoin or Ethereum is relatively and can be done on a fiat-to-cryptocurrency exchange like Coinbase, Localbitcoins, or Coincola. The price is agreed upon by both buyers and sellers and generally closely follows the market price.
Mining cryptocurrency is as easy as downloading a software that will make your computer part of the blockchain as a node. Now, while different blockchains use different Proof-Of such as POW or POS, it is possible to earn from all of those as long as you have the required hardware; do note, however, that mining farms control most of the hashing power in some of the most popular blockchains like Bitcoin. To combat this some blockchains were implemented with an algorithm making it harder for mining farm to well farm, and instead made it easier for personal computers to participate.
The third and last way of getting cryptocurrencies is to simply receive them. You may receive coins as part of an airdrop campaign, as payment, present, or even playing video games. The internet offers a myriad of possibilities when it comes to receiving cryptocurrencies.
Q: How to get a cryptocurrency wallet?
A: Congratulations, you just earned your first #insert cryptocurrency# now you have to keep it secure, but how to get a cryptocurrency wallet? Cryptocurrency wallets come in two shapes; hot wallets and cold wallets.
Hot wallets are online and always somewhat connected to the internet, they allow for instantaneous and near effortless transfers. The downside of hot wallets is that, while convenient, they provide less security, and are susceptible to attacks. Two popular hot wallets are Exodus and Jaxx.
Cold wallets, on the other hand, offer much more protection than hot wallets do in exchange for convenience. Cold wallets are hardware and must be connected to the internet, for example through a USB port, before any transaction can be made. It is recommended to disconnect a cold wallet as soon as you are done using them to maximize safety.
Q: How to use cryptocurrency?
A: Now you have your cryptocurrencies securely tucked into your wallet, but you’re wondering; how to use cryptocurrency?
Cryptocurrencies are mostly used in two ways, to trade or to make a payment. Trading cryptocurrencies can be done either against fiat currencies (national currencies such as dollar or euro) or against other cryptocurrencies such as Ethereum or Monero. The last way to trade cryptocurrencies is to use derivatives such as futures or perpetual contracts.
To trade we recommend the following:
Best Cryptocurrency fiat-to-cryptocurrency exchange: Coinbase, Localbitcoins, Coincola.
Best Coin-to-coin cryptocurrency exchange: Binance, Bitfinex, Kraken, Bitfinex
Best cryptocurrency derivatives exchanges: Bybit, Deribit, Huobi
Cryptocurrencies can also be used to make a payment, whether you want to buy a new video game, pay your employees, order a coffee, or go on a trip cryptocurrencies can do it! Cryptocurrencies shine by their low fees, security, but also, and mostly, by the elimination of some unnecessary middlemen in certain cases making the cost much lower.
To learn more about cryptocurrency payments simply google “buy” with what you wish to buy and “with cryptocurrency”.
This concludes today’s article about how to get into cryptocurrency, we hope you learned a lot, enjoyed the read and stay tuned for more great content.