Cryptocurrency continues to perplex investors, but the following short guide helps take the guesswork out of understanding this new asset class, which is only expected to continue to grow and dominate the market.
What is Cryptocurrency?
Cryptocurrencies are digital currencies that are encrypted with codes to help make them more secure.
They also operate and are spread among their community via a distributed ledger as opposed to a government, bank, or other central authority like paper currency, which gives them their power.
However, like paper currency, digital currency also has a defined monetary policy that determines the creation of new tokens as well as their fixed amount and more based on preset guidelines.
Cryptocurrencies can also be used to make a wide range of purchases similarly to traditional currency, from pizza to real estate and more provided the merchant accepts it as a payment option.
Why are Cryptocurrencies So Popular?
Digital currencies were initially created as an answer to the questionable financial system by removing central banks and governments, etc., thus, helping to eliminate the devaluing of the money via inflation and more.
Because they are more valuable than paper money, many users view them as the currency of the future. Hence, they are rushing to buy them up before they become even more valuable, in turn inspiring investors to also purchase the coins as long-term investments for their growing worth.
Meanwhile, many others support digital currency for the blockchain technology behind them, which they feel helps make them more secure than other payment systems.
How Do I Buy Cryptocurrency?
Digital money can only be purchased on an online trading broker or cryptocurrency exchange.
Some also require you to pay with another cryptocurrency as opposed to traditional currencies.
You’ll first need a wallet, which is an online app that stores your digital coins, to purchase digital currency. After which time, you can transfer traditional funds to buy digital currencies.
Various cryptocurrency exchanges enable you to both open a wallet and buy and sell cryptocurrencies via their platform for added convenience.
Once you have purchased cryptocurrency, it can then be stored securely in your wallet until you are ready to make an exchange or send it to friends and more.
Popular Cryptocurrencies
Bitcoin is the first and probably most popular form of digital currency on the market today. However, since the launch of the original digital coin, many other cryptocurrencies have emerged, also becoming popular in use.
Ethereum is one of these cryptocurrencies, and it continues to grow and thrive over time.
According to the experts at Money Morning, “younger generations tend to know their obscure cryptocurrencies like Dogecoin, IOTA, and Komodo.”
In the meantime, you can simply research current cryptocurrency investing trends to see what other major investors and large companies are investing in to determine which digital currencies are becoming popular.
In fact, Dogecoin’s notoriety is believed to be due to the influence of big names like Mark Cuban and Elon Musk, whose purchase of the coins later caused the price to shoot up more than 70 cents since they first bought it.
So be sure to do your homework and research current cryptocurrency investing trends, such as the ones provided by Money Morning, to help find the best digital currency investment for you.