Basics of Cryptocurrency Investing

Cryptocurrency is not well known among many people, including some who are involved in the finance and investment industries. Many have heard of Bitcoin but don’t exactly know what it is or how it works. Bitcoin was introduced to the public in 2008, but it’s still a mystery as to whether it’s a currency that can be used to buy goods and services or if it’s something else. Before you decide to invest in cryptocurrencies, it’s important that you know what it is and how it works.

Satoshi Nakamoto, the anonymous inventor of Bitcoin, wanted to create a decentralized peer-to-peer digital cash system outside of any centralized banking system. A simple explanation as to how this works is that the Bitcoin network, or any other cryptocurrency network, is made up of peers who make digital Bitcoin transactions between one another. There must be a consensus among the peers who can confirm that a transaction took place.

For instance, if John gives 20 Bitcoins to Jane, then Jane must confirm that this transaction took place, and peers in the network must agree that this transaction happened. Essentially, cryptocurrency like Bitcoin is a place to exchange monetary units that have no intrinsic value, no physical form, and has no centralized structure that controls the supply and demand.

Cryptocurrency is more like a stock than actual currency. When you invest in a cryptocurrency, you are basically buying the equivalent of a tech stock. You can invest and trade cryptocurrencies by purchasing and selling cryptocurrency through an exchange. There are several reputable exchanges that specialize in cryptocurrencies such as Coinbase, Kraken, Poloniex, Bitstamp, and Bitsquare. You should check the exchange’s fee, exchange rates, verification requirements, restrictions, payment methods, and reputation before you start trading with the exchange.

Once you have opened an account with an exchange and linked it to your bank account, buying cryptocurrency is easy. You just need to access the ‘Buy’ button, select payment type and desired amount, then hit the ‘Buy’ button. At that point, your exchange account will be credited with the purchase. You can invest in cryptocurrencies, but you will have to check to see if the exchange you have chosen will allow you to invest. You can also open an account on multiple exchanges and trade between those exchanges. There are many ways you can trade, invest, and make money with cryptocurrency. Find a strategy that works for you and take advantage of this new market.