If you’re here to learn about cryptocurrencies, then congratulations! You’ve arrived at the perfect time. In this comprehensive guide, we’re going to cover everything you need to know in order to trade, invest, and exchange cryptocurrencies.
The past few years have seen an explosion in the popularity of cryptocurrencies.
What is Cryptocurrency
A cryptocurrency is a digital or virtual asset that uses cryptography for security. Cryptocurrencies are decentralized, meaning they are not subject to government or financial institution control.
Bitcoin, the first and most well-known cryptocurrency, was created in 2009. Since then, thousands of other cryptocurrencies have been created. These are often called “altcoins,” short for “alternative coins.”
What is Blockchain
A blockchain is a digital ledger of all cryptocurrency transactions. It is constantly growing as “completed” blocks are added to it with a new set of recordings. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data. Bitcoin nodes use the block chain to differentiate legitimate Bitcoin transactions from attempts to re-spend coins that have already been spent elsewhere.
Digital Currency Exchange
Cryptocurrencies can be traded in two ways:
1. On a cryptocurrency exchange – Cryptocurrency exchanges are websites where you can buy, sell, or exchange cryptocurrencies for other digital currencies or traditional currencies such as US dollars or Euro.
Coinbase is the most popular cryptocurrency exchange in the world.
2. Directly with another person – You can also trade cryptocurrency directly with another person. This is often done through a peer-to-peer (P2P) marketplace.
LocalBitcoins is a popular P2P marketplace.
How to Invest in It
Cryptocurrency investing is similar to other types of investing such as stocks, ETFs, and real estate. The goal is to buy low and sell high.
There are a few ways to invest in cryptocurrency:
1. Buy and hold – This is the most common way to invest in cryptocurrency. You buy crypto at a low price and hold it until the price rises, then sell it for a profit.
2. Day trading – Day trading is buying and selling cryptocurrency within the same day. You take advantage of price swings to make a profit.
3. Margin trading – Margin trading is borrowing money from a broker to buy cryptocurrency. You hope that the price will go up so you can pay back the loan and pocket the difference.
How to Store It
Cryptocurrencies are stored in digital wallets. There are two types of wallets: hot wallets and cold wallets.
Hot wallets are connected to the internet and can be used to buy, sell, or trade cryptocurrency. Cold wallets are offline and can only be used to store cryptocurrency.
How to Buy Bitcoin with a Credit Card or PayPal
The easiest way to buy Bitcoin is with a credit card or PayPal.
There are many reputable exchanges that allow you to do this, such as Coinbase, CEX.IO, and BitPanda.
How to Mine Cryptocurrency
Mining is how new cryptocurrency tokens are created. Miners use powerful computers to solve complex math problems. When they solve a problem, they are rewarded with cryptocurrency.
Mining is also how blockchain transactions are verified and added to the blockchain ledger.
There are two types of mining:
1. Solo mining – You mine by yourself and keep all the rewards.
2. Pool mining – You join a mining pool and share rewards with other miners.
