What is Cryptocurrency? A Guide For Beginners

Cryptocurrency can be defined as an encrypted data string that denotes a unit of currency. This simply means that crypto is a type of digital currency that can be used to purchase a product or avail a service. 

Cryptocurrency: Meaning and Definition

It does not have a central issuing or regulating authority that supervises it. Therefore, In order to record transactions and manage the issuance of new units, it uses a decentralized system. This decentralized system completely relies upon cryptography to ensure secure and ethical transactions. 

Currently, there are over 15,000 different cryptocurrencies that are traded in the world. The number is on a constant rise with many companies issuing their own currencies, often called tokens, that can be used to buy their product and services.

Steps to Invest in Cryptocurrency

Now that you have acquainted yourself with the concept of cryptocurrency, the next step is to understand how you can actually make money from it. In this article, we will just try to take you through the important steps that you should follow to have a safe experience while investing in crypto. 

  • The first most important thing is to do thorough research on the different types of cryptos and how they function. Many cryptos keep coming and disappearing in the market, so you should study deeply about the one you are interested in investing in to avoid getting your money down the drain. For example, you can consider the Best Crypto Exchange Australia for the most profitable options.
  • The next step is to assess the risk that comes with crypto investments. Cryptos are highly volatile in nature and can throw your financial state off balance. As a beginner, you should never put all your baskets in the same direction, meaning you should start with smaller amounts of investment and once you begin to understand the nuances, you can increase the amount gradually.
  • After you have assessed the risk, you will need to buy and store the crypto to invest in it. You can buy cryptos from the various crypto exchanges or can get them from a friend, relative, or even a colleague who is willing to sell them. After buying, you will have to save them in the crypto wallets. They are software that securely stores your cryptocurrency. 

Popular Cryptocurrencies

Having discussed the nuances of crypto investments, let us now look at some prominent cryptocurrencies that are doing well. These could be a safe option as you begin investing in cryptocurrencies.

The most popular cryptocurrencies are:

  • Bitcoin- It is by far the most popular crypto presently, so much so, that it is almost synonymous with crypto. It is the first digital token that was launched in the year 2009. It is also considered a legal tender in El Salvador. 
  • Solana- It is a more recent player but is performing really well in the crypto market. It was launched in March 2020 and saw a major price rise of 17,500% in 2021.
  • Ethereum- It has emerged as the first Bitcoin alternative in the virtual token sphere. Launched in 2015, it has become the second-largest player in crypto.
  • Dogecoin-  started off as meme content, dogecoin has become the preferred crypto of influential people such as Elon Musk and Mark Cuban.

So, what’s next?

Now that you have already made up your mind to invest in crypto, there are a few things that you should know. The most important point is that cryptos are more complex and volatile than stocks. Keep your finances in place as a proper risk management plan, a diversified portfolio of investment, and most importantly, an emergency fund.