We all have that friend that corners us in the room during a party and starts lecturing about cryptocurrencies for the next two hours saying that you just have to invest. It’s such a buzzword right now that we hear stories about it every day on the news. But what exactly is cryptocurrency and how does it work? Your friend isn’t actually crazy, there’s a potential to make a lot of money but like any booming market, you can also quickly lose it all. This short guide will explain what Cryptocurrency is, how it works, and how to get involved smartly.
So What is Cryptocurrency?
Cryptocurrency is just like any other currency in the world from US Dollars to Euros, but with a twist. The difference is that its value isn’t based on gold or economic strength as in traditional economies. Instead, it operates without a central bank and is purely digital currency where it’s value is determined by market exchange value. In fact, the lack of a central bank is one of cryptocurrencies greatest features because it makes it very secure against data breaches.
In Bitcoin trading, a currency’s total assets are held on a shared ledger held across the entire network ensuring it is well-guarded against digital threats because if one location is compromised, it doesn’t affect the rest. The ledger is also automatically updated frequently to ensure all values are up to date at any given time.
How Do I Get into Trading?
These days, cryptocurrency trading has grown extremely popular, we hear about it every day on the news and many people have made tons of money on it. But what exactly is Bitcoin? Bitcoin is actually the name of a specific cryptocurrency, but it’s become so popular it’s used much the same way we say Kleenex when referring to tissues, Coke for soda and Q-tips for cotton swabs.
Bitcoin is definitely the king of the cryptocurrency market, but investing in it now is kind of like investing in Apple. One Bitcoin is actually more expensive than a share of Apple stock costing several thousand dollars.
Instead, it makes to look to different currencies who are trying to become the next Bitcoin. For example, the fifth-ranked Ripple Currency had a market cap of nearly $19 billion in June 2018. These are where you want to begin your search because they have the highest potential for growth and a typically low cost to begin investing.
Choosing the Right Currency
This is where Bitcoin trading may seem a little complicated. Just like stocks or any other investment, it’s hard to predict which company will be the next Apple or Google, but there are a lot of helpful hints out there. Begin first by researching the company. Where did they come from? Some of the most profitable cryptocurrencies out there come from teams who were originally from Bitcoin and have branched off to form their own currency.
Also look for features. The best coins use innovative technologies from encryption to exchange capabilities which make transfers between users smooth and secure. Companies that are built on solid principles and who adopt the latest technologies are good choices.
Finally, don’t put all your money in one place. This is common sense for any investment, but it is particularly true for Bitcoin and cryptocurrency. The market is booming so quickly that it’s hard to predict what exactly will happen. Diversify across several reliable currencies and keep informed. There are countless forums and apps to keep track of both important industry news and currency values so you can make smart decisions.
Bitcoin Trading Made Simple
Cryptocurrency trading can be extremely exciting and a way to potentially make a lot of money. If you have some money set aside that you are comfortable rolling the dice with then with a little homework and a little luck, you just might find the next major cryptocurrency and hit it big!