What is Cryptocurrency? Five Tips to Invest in Crypto Safely
What is Cryptocurrency?
A cryptocurrency is a digital and virtual currency that is a medium of exchange. It is similar to a real-world currency, but it does not have any physical embodiment and uses cryptography to work on it.
Because cryptocurrencies operate independently and work in a decentralized manner in which it does not require any bank or central authority. New units can be added to it only when it passes certain conditions. As with bitcoin, a block can only be added if the miner is rewarded with bitcoin and this is the only way new bitcoins are generated. The limits of bitcoin are up to 21 million, after that no bitcoin can be produced.
Benefits of cryptocurrency
With cryptocurrency, the transaction cost becomes negligible. For example, when we transfer money from a digital wallet to a bank account, we have to pay some fees. You can process transactions at any time of the day and night and there is no limit on purchases or withdrawals. And the second big benefit is that anyone can freely trade cryptocurrency as in opening a bank account, we have to do a lot of paperwork and documentation, nothing like this has to be done.
International cryptocurrency transactions are much faster than wire transfers. Wire transfer takes about half a day to transfer money from one place to another but with cryptocurrencies, you can do your transactions in just a few seconds and minutes.
How does it work?
Cryptocurrencies run on a distributed public ledger called a blockchain, which records all transactions. There is a currency holder to update all the transactions.
The units of cryptocurrency are created through a process called mining. There are some complicated mathematical problems in this and, computer power is used to solve those mathematical problems, due to which coins are generated. Users can also buy currency from brokers and then store them. And can spend those currencies with the help of a cryptographic wallet.
If you understand the currency by yourself then nothing is difficult. If you know the record of cryptocurrency and methods to measure a unit then you will not need any third party. The application of Cryptocurrencies and Blockchain technology is very high in financial terms and is expected to reach even higher levels in the future.
Best Example of Cryptocurrencies
There are many cryptocurrencies, the main ones being:
It was discovered in 2009. Bitcoin is the first cryptocurrency and the most commonly traded. This currency is developed by Santoshi Nakamoto.
It was discovered in 2015. Ethereum is a blockchain platform, which itself is a currency from which Ether(ETH) and Ethereum speak. It is the most popular cryptocurrency after bitcoin.
This currency is very similar to bitcoin but it is developed quickly for innovations so that faster payment takes place and it allows a process for multiple transactions.
Ripple is a distributed ledger system that was discovered in 2012. Ripple is used to track many types of transactions. Unlike cryptocurrency, they work with many banks and financial institutions.
Non-public bitcoin cryptocurrencies are called ‘Altcoin’ and are distinguished from the original by the same name.
What is Blockchain?
A blockchain is a decentralized ledger for everyone in the peer-to-peer network. Using this technology, the participants can confirm the transactions without the need for any central clearing authority.
Is Crypto Safe?
Cryptocurrencies are mostly created using Blockchain technology. The blockchain describes the record of the transaction. It is a very complex and technical process but the result of cryptocurrencies is a digital ledger due to which it is very difficult for hackers to hack.
Also, two-factor authentication is required to process the transaction. For your convenience, it requires a username and password to initiate a transaction. After that, you have to enter an authentication code which is sent via text to your cell phone.
Crypto Scams and fraud
Unfortunately, cryptocurrency crime continues to reach its peak. Cryptocurrency scams are on the rise, the main ones being:
Bogus sites that show you fake testimonials and make big promises to you are fake websites. They suggest you give guaranteed returns and keep investing from you continuously.
To show like a celebrity:-
Scammers impersonate themselves as well-known billionaires and promise to increase their investments in virtual currency. But instead of fulfilling the promise, they steal your investment from you. They also use various messaging apps and chat rooms to start rumors that you feel that some famous businessman is giving you full support.
For a time, they encouraged investors to buy and run the price and After that, they sell that currency by increasing it and, reducing the real value.
Cryptocurrency criminals promote non-existent achievements. They will encourage you to invest in digital currencies and try to create a false image in front of the investors. They give the money of the old investor as profit to the new investor so that the new investor gets confidence.
Five Tips to invest in Crypto safely
Investing in cryptocurrencies is very risky. But if you want to invest in it then some tips will help you a lot:
Before investing, do good research about cryptocurrency exchanges. Before investing in cryptocurrency, read its reviews and talk to many experienced investors, and know about their experience.
Know about how cryptocurrency is stored:-
If you are buying cryptocurrency, then you will also have to store it. You can store it on the exchange or in a digital wallet.
Spread your investment:-
Spreading is the hallmark of a good investment strategy. Don’t invest all your money in bitcoin only. There are many other options also available so that you can spread your investment in different currencies.
Prepare for ups and downs:-
There are many ups and downs in the cryptocurrency market, so prepare yourself for them. You will see a lot of swings in money. If your investment portfolio and mental condition are not good and if you cannot handle these swings, then investing in cryptocurrency is not the right option for you.
Be aware of antivirus and viruses too:-
To make online investment safe, having complete knowledge about any antivirus is very good and the only option. There are many malware infections, spyware, and data thefts that you can come across and in that case, Anti-Virus helps you.