The Ultimate Beginner’s Guide to Cryptocurrency
Cryptocurrency, most commonly identified as digital money, was first instituted in 2009, with the very famous Bitcoin launch. Litecoin followed launch in 2011, and since then, many more crypto assets have joined the crypto world.
In crypto, the currency is secured by cryptography, thus protected against counterfeiting and double-spending. The host of crypto is blockchain, a decentralized ledger system using state-of-the-art infrastructure.
Recently, the advancements in the crypto world have made many people think of investing in crypto. Beginner investors want to enjoy the crypto world’s benefits, but they have no idea how to start. Therefore, this write-up will give every investor a short guide into the crypto world, start, the benefits, and associated risks. Keep reading to find out more.
Must-Have Tools in Crypto
When choosing to invest in the crypto world, there are tools that a user must-have. Here are the most crucial crypto beginner tools;
Wallet, The Storage Tool
A crypto wallet is a must-have tool when joining the crypto world; therefore, you first need to get the best wallet and sign-up. Wallets are necessary tools for storing private keys of particular assets. The best class of crypto wallets is non-custodial wallets, allowing the user full control over their funds. Examples of these wallets include;
Exchange Platforms, The Crypto Market Place
Another vital tool for crypto is a crypto exchange platform that allows a user to buy and sell crypto assets. Users can exchange crypto for crypto or fiat, depending on the exchange selection. Among the best exchange platforms include;
Portfolio Tracking Tool
Since there are thousands of crypto assets, an investor may decide to invest in several crypto assets. At this point, the investor will need a useful portfolio tracking tool. Portfolio trackers help investors manage their crypto investment portfolios in one dashboard. Currently, there are dozens of portfolio tracking tools, but the top five include;
Coinmarketcap is a crypto informational tool displaying charts and analytical information about individual coins and the market as a whole. In this platform, you get details like the prevailing market price, market cap of the assets, the 24 hours and seven-day charts showing the price changes. Coinmarketcap is, therefore, a tool that all crypto users should use to understand the crypto world.
Crypto News Publications
News publication platforms are also crucial for crypto users and especially for a beginner. At the start of your crypto journey, you need to get enough information about the crypto world, the latest market cap, coins, etc. Among the best crypto news and publication platforms providing trustworthy information include;
What is the Best Crypto Investment Options?
Although there are currently over 10,000 cryptocurrencies, very few of them are good investment options. Some of them have stagnating growth, while others are just dead. So, what cryptocurrencies are the best investment prospects?
- Bitcoin has a current market cap of over $1T, with the unit price standing at around 52k. The growth of BTC has been impeccable, with the asset almost tripling in price in less than four months.
- Ethereum is the second-largest crypto by market cap. Currently, its market cap stands at $218 billion and a surging unit value of $1.8k
- Litecoin is another good crypto investment, with a unit price of $226 and a market cap of $15 billion.
- Binance coin
How Can You Earn in Crypto?
As a beginner, you need to know how to start making returns in crypto. The crypto world provides vast opportunities for earning passive income. Among the ways include;
- Staking- Staking involves using PoS algorithms to validate crypto transactions and release new blocks. Staking parties earn rewards in the form of cryptocurrency.
- Mining- Mining leverages PoW algorithms where the miner completes complex computations and releases blocks. In return, the miner gets rewards in the form of currency mined.
- Bounties and Affiliate marketing
- Lending- Involves lending crypto to third parties and, in return, receiving interest.
- Liquidity provision- Involves collateralizing some amount of assets to provide liquidity for a particular crypto asset.
- Masternodes and lighting networks.
- Airdrops and forks
What are the Benefits of Cryptocurrency?
The crypto world has vast benefits both for its users, be it a beginner or experienced. Here are some of the benefits;
- Cryptocurrency eliminates intermediaries in transactions. The traditional financial world has processes that involve brokers, paperwork, commissions and often take colossal amounts of time. Cryptocurrency involves direct and peer-to-peer interactions, thus more transparency and convenience.
- The Crypto world offers privacy in transactions. Currently, fiat systems lack transparency almost every way, with the banking systems saving your details and accessing your accounts. However, cryptocurrency makes transactions highly confidential; in P2P cases, only the transacting parties have the transaction information.
- In the traditional financial systems, transaction fees are often hefty, with costs being imposed on almost every activity, including writing cheques and transferring expenses. At times there are fees imposed to pay other fees. However, cryptocurrencies like BTC tend to impose lower to no fees. Although some crypto service platforms charge fees, the costs are relatively lower than the levies charged in fiats.
- Cryptocurrency offers top security by fostering complete immutability and transparency. Blockchains possess the attributes of transparency and immutability; thus, fraud is almost impossible in the blockchain.
- The infrastructure hosting crypto also makes it relatively easy for persons to complete international trades. As long as the legal jurisdictions accept crypto assets, the transfer to global bounds is affordable, fast, and comfortable.
- The volatility in crypto has created humongous amounts of wealth for crypto investors. For instance, BTC has been gaining serious momentum in the past six months. In October, for example, its price was at the $13k mark, but today as it stands, the coin values at $52k, four times the October price.
Risks Associated with Cryptocurrency
As many as the benefits of treading in the crypto world are, there are more risks. It would help if you understood some of the following risks before you begin your crypto journey;
- If you lose your details like the private key, you might lose your wealth entirely. Most crypto platforms do not have the recovery option, thus making it risky for the users.
- Mining cryptocurrency has proven to have severe environmental issues. Moreover, mining consumes humongous amounts of electricity. The ecological costs of mining are a severe problem today.
- The crypto platforms are prone to hacking. To date, many have been hacked. However, most platforms set robust policies to reduce the chances of hacking.
- Volatility, although useful, is a severe risk. For instance, the prices of BTC in 2017 surged to $17.9k, but by the end of February, it plummeted to about $6.2k. The episode caused severe losses for some FOMO investors.
- The crypto world is not regulated, meaning they don’t adhere to any particular code. As such, if scams occur, it may be impossible to trace them, and the user might lose a big deal.
Ready to Invest in Crypto?
After reading the details above, you might decide that the road is clear and ready to invest. Thus, take the first step of signing onto a wallet service. Read crypto information from publications highlighted above to understand what’s trending in the crypto world.
Choose the asset to invest in after thorough research on the coinmarketcap platform. Understand the assets market analysis for some time before taking the step to invest.
Identify the risks associated with the crypto world, and find a way to hedge against the risks. After adhering closely to the steps mentioned above, you can now invest in crypto and start earning.