Six Things to Know When Starting Your Cryptocurrency Journey

After reading this article, we hope that you will make more informed decisions about your investments and feel much less intimidated by the trading world. Before you jump in to buy Bitcoin, here are six things you should know about the growing world of cryptocurrency.

1. What Is Cryptocurrency?

Cryptocurrency is essentially digital currency. It allows people to transfer value across the Internet, often without transaction fees and in many cases without any middlemen. The big benefit here is that it’s much faster than other payment methods.

Cryptocurrency first emerged with Bitcoin. Sometimes people think it’s the only cybersecurity coin out there, but that’s far from the truth! There are many different types of cryptocurrencies available right now, and most of them have unique benefits.

2. How Does Cryptocurrency Work?

Let’s take Bitcoin as an example (the most popularly known cryptocurrency). Compared to other forms of payment, it’s quite different. With Bitcoin, there are no banks involved in the transactions you make. The system uses complex cryptography that makes it possible for people to send each other money without getting any help from a third party.

Anyone can download free software onto their computer and become part of the system. This software helps people make secure transactions with direct, instant transfers of digital currency anywhere around the world.

3. There Are Some Risks Involved

For one thing, it’s unregulated by governments worldwide to decide how much value a dollar or euro has. So what is the consequence? It’s not as stable as a currency backed by a government, so the value of your coins can be all over the place from one day to the next.

In addition, it’s also important to note that cryptocurrencies are highly volatile. This means they can go through major price fluctuations in a very short amount of time. In the past few months, Bitcoin's value has risen to $50,000 per coin. However, it has also fallen by $10,000 in mere days, only to rise once more.

4. You May Need a Bit of Money to Invest in Them

Not all cryptocurrencies are free like Bitcoin. Some cost money to buy and can only be obtained by mining (trading computing power for coins). But, one thing is for sure: you don’t need to have a fortune to buy Bitcoin or other coins.

However, if you do have a bit of extra spending money and want to put it into the system, note that there are very few risks involved, too – but they can be big ones. Remember that virtual currencies fluctuate wildly from day to day and can be incredibly hard to predict.

5. Governments Are Catching on to Cryptocurrency

Governments around the world are starting to realize that digital currencies such as Bitcoin and Etherium could end up changing finance and that this change will be for the better. Some of them have started developing their own cryptocurrencies too.

Countries such as El Salvador have even made Bitcoin a legal tender that can be used for paying bills and other transactions. China and the United States have opted to create their own "stablecoin" (cryptocurrency with a fixed value) to offer the benefits of cryptocurrency while still maintaining regulation.

6. Cryptocurrency Does Have Criminal Implications

After Bitcoin was launched, people realized that the system could be used for criminal behaviour too. When you send crypto coins to someone else, there is no third party stopping the transaction. This means that transactions made with Bitcoin are by their nature very difficult to trace – perfect for criminals!

Criminals engaging in cyber hacks have even required ransomware victims to pay the ransom in Bitcoin and other cryptocurrencies – hoping to cash in on the rise while avoiding the eye of investigators.

Invest Wisely – and Have Fun!

Getting into the world of cryptocurrency is a great way to get yourself a small slice of the future. However, it’s still important to be careful when you invest in cryptocurrencies – and make sure you take all your research seriously before putting money into an online wallet.