In the past few years, cryptocurrency has been gaining a lot of popularity in the market. The rise in demand has led both different countries and people to invest in crypto money. At some point, you must have heard about someone who invested in cryptocurrency and is now filthy rich. While it does sound exciting and tempting, investing blindly can be risky, as it can do you more harm than any good.
There are several advantages and disadvantages to cryptocurrency investments as they offer some exciting rewards. Since crypto investors are getting more and more involved in digital money, it is important to study the cryptocurrency market and understand how it works. Read on to understand the basics of cryptocurrency and what to watch out for.
What is Cryptocurrency?
Cryptocurrency is a digital currency that can purchase goods or services electronically. Crypto companies issue their currency which is often called coins or tokens that can be traded between people and companies. It is secured by cryptography, an online ledger that ensures your transactions are safe.
In simple words, you use cryptocurrency to transfer digital currency with someone online without any third party such as VISA or Paypal. You exchange your real currency for cryptocurrency which is stored in a digital wallet that is accessed with a private key. Looking for a crypto exchange? Here’s a list of the Best Crypto Exchange Australia that is easy and safe to use.
How does it work?
Cryptocurrencies use blockchain technology that is spread across many large computers to manage and record any crypto transactions. Also called a distributed ledger that is a public record that offers transparency and anonymity through highly complicated encryption.
Since cryptocurrencies are not centralized meaning they are not government-issued currency. Cryptocurrencies are worth whatever someone is willing to pay for them or exchange for them. Today, there are several cryptocurrency brands available in the market. Read the next point.
The most popular cryptocurrencies
Due to high demand and popularity, several cryptocurrencies have emerged in the market fighting for the top spot. The fact that they are decentralized, countries have been creating their own digital coin or tokens for the people.
So if you are still interested, it is never too late to invest. According to Coin Market Cap, Bitcoin, Ethereum, Cardano, and Binance Coin are the top five crypto coins in the market today.
Is it legal?
Many countries have begun accepting cryptocurrency as digital money has been emerging as a market trend. Since it is not centralized by any government authority, there is no formal regulation as such. However, as of June 2021, bitcoin has been made legal in the United States, United Kingdom, and Japan. El Salvador becomes the first country to recognize cryptocurrency as a legal tender in June 2021 as well.
It is important to note that some countries have banned banks from dealing with cryptocurrency but allow citizens to trade without criminalizing them. That’s why it is important to know the laws of your country in regard to crypto money before taking action towards it. This will protect you from breaking any laws and also from fraudsters with fake sites.
Why are they so popular?
One of the key reasons why people are opting for crypto money is that they believe that this investment will reap great returns in the future. This is both attractive and appealing to investors as people believe it is the currency of the future.
Many cryptocurrency supporters believe that a decentralized system and technology provide more security than a traditional online transaction. It also reduces the transaction fee locally as well as internationally. Some users just use cryptocurrency as a medium to add more value to their money as a short-term investment. While others are focused on long-term investments to reap the benefits in the future.
Where to start trading?
Due to the popularity, there are several cryptocurrency trading platforms out there. But as a newbie, it may be hard to find the most reliable platform. People have been trading in the cryptocurrency market for quite some time now and the experience developed has enabled them to use much more complex tools for their investments.
As a beginner, you might want to take it slow and start small with a platform that is easy to navigate and fits according to your crypto trading requirements. Once you have gained enough understanding on these crypto trading platforms, you can venture off and turn yourself into a trading veteran. That being said, use these trading platforms to start your journey in cryptocurrency today!