Everything you need to know about cryptocurrency: A beginners guide
What to know about Cryptocurrency?
Cryptocurrency is money that you can’t physically hold in your hand. It is digital money without any physical coin or bill – it is all online. As the quote goes “The world is getting smaller”, we humans are forgetting that there are boundaries among us. The 21st century may not have shown flying cars yet but we for sure know that transactions are not bounded by any boundaries.
To transfer money from your country, say USA, to any other country, say EU, you have to involve banks, third parties which charge you a certain amount for their services of converting Dollars into Euros. But in the case of cryptocurrency, there is no such thing as an intermediator. People use cryptocurrency for their payments to save on intermediator charges.
But that’s not all, people also tend to invest in it, but before going into that you must know about cryptocurrency’s merits and demerits.
- Cryptocurrency isn’t backed by any government.
No guarantee from any government for your cryptocurrency. As all the money is online, it is very difficult for which government to be held responsible for its security. You keep your cryptocurrency in a digital wallet provided by a company and if the company’s bankrupted or hacked, you lose your crypto. Unlike banks where you store your traditional bills and government can help to get your money back.
- The value of Cryptocurrency is constantly changing
An investment of thousands of dollars can be worth a million in a couple of hours, if you’re lucky, but it can also reverse to few hundreds. There is no guarantee that it will rise or fall.
Bitcoin and Ether are well-known cryptocurrencies but new cryptocurrencies will always be coming in such as Dogecoin which gained popularity in a very short period of time – thanks to Elon Musk.
How to buy Cryptocurrency?
Over the last few months, buying and selling of cryptocurrency have been made a lot simpler. There are four factors before you make a purchase.
- Location is important as you need to know your country’s regulations when it comes to cryptocurrency.
- Payment Methods include credit, bank transfer, or even cash. Different websites accept different modes of payment.
- Type of cryptocurrency decides on which crypto to buy as not all are available for purchase on every website.
- Cost of Fees is very important to consider as different websites have different fees. But don’t worry, most of them are cheap and others are very cheap.
Once you’re done with the above requirements, the next you need is a wallet, well not the one in your pocket but a digital one.
Cryptocurrency Wallet
A cryptocurrency is where you can store your cryptocurrency after purchasing. There are three types of wallets.
- Online Wallet is quickest to set up but also least safe.
- Hardware Wallet is a portable device you plug into your computer via USB, the safest option.
- Software Wallet is an app you download, safer than an online wallet.
Steps in Buying Cryptocurrency
- Choose an Exchange
There are many types of cryptocurrency exchanges that allow you to buy, hold and sell cryptocurrency. It is considered the best practice to use an exchange. In the United States, the most commonly used exchanges is Gemini, Coinbase, Kraken and Binance U.S. Some exchanges allow user to remain anonymous.
- Connect your Exchange to Payment Option
Depending on your exchange, you need your documents which may include driver’s license, social security number. The process is more like setting up a brokerage account. You can use a credit card to buy.
- Make the Purchase
Once you’ve chosen the exchange and connected payment option, you can place an order for crypto of your preference.
- Safe Storage
Having your crypto in your personal wallet ensures that only you have control over your funds. You can choose a wallet of your own liking.
Investing in cryptocurrency can be a good choice but learn a thing or two before, you know just to spot a risk or maybe a scam.
- No one can guarantee that you’ll make money
All that glitter is not gold, similarly not all investment endorsed by a celebrity is safe and good. If someone is guaranteeing profits, turn away because that’s likely a scammer.
- Good if you invest your spare money
You invest only the amount which you feel is extra. Don’t rely too much on cryptocurrency, don’t gamble away you’re daily bread-and-butter.
Paying with Cryptocurrency
If you’re planning on using cryptocurrency for your payment, you better look into the differences between crypto and traditional bills.
- Refunds are not possible in cryptocurrency
If by any mistake, you transfer the currency to the wrong account, you can’t ask for a refund. It is because the sender’s and the receiver’s identity is not unveiled. Unfortunately, that information is used for a lot of illegal activities through the internet, a part of the internet known as the Dark Web.
- Some information is likely to be public
Although the identities of both sender and receiver are veiled, the transactions may be posted to a public ledger like Bitcoin’s blockchain. It is a public list of records which the transaction details like the amount. Depending on the cryptocurrency, the information can vary, it may include sender and receiver’s wallet address.
Cryptojacking
When someone is using your smartphone or computer’s processing power without your permission in order to mine cryptocurrency for their own benefit is a scam known as Cryptojacking. They can help themselves get into your device’s processor by putting a malicious code on your device simply by visiting a website.
Your device is slower than usual or burns battery quickly, it may be that your device has been prey to cryptojacking.
What can you do?
- Use antivirus software and don’t install the software you don’t trust.
- Be careful about visiting unfamiliar websites. Do not click a link, if you don’t know where it leads.
- Close sites or apps that slow the device or burn your device’s battery.
