What Is Cryptocurrency? — An Absolute Beginner’s Guide to Crypto
Cryptocurrency often referred to as “crypto” is primarily a digital currency that you can use to buy services or goods. Cryptocurrency involves the usage of a certain online ledger that has strong cryptography for securing online transactions. The reason why people are developing interest in such unregulated currencies is to gain a profit via trading.
If you are a beginner to crypto and are still confused regarding what cryptocurrencies are, we’ve got you covered. In this absolute beginner’s guide, we will shed light on the basics of crypto, cryptocurrency market, cryptocurrency mining, and various other significant topics.
What are cryptocurrencies?
In simple words, a form of payment that you can exchange online in return for goods or services is called a cryptocurrency. Scores of companies around the globe have launched their currencies that they often refer to as “tokens”.
These companies prefer to trade their currency particularly for the goods or services that they provide. You can buy cryptocurrencies with real money just like you buy casino chips or arcade tokens with real-world currency.
Cryptocurrencies operate via a technology commonly known as the blockchain. You can understand blockchain as a decentralized technology that is spread across millions of computers that record and manage transactions. The reason why masses prefer this technology is due to its sound security features.
Are there a lot of cryptocurrencies? What is their worth?
Yes, till now, plenty of cryptocurrencies have been introduced in the market and people across the globe are trading them publicly. According to a cryptocurrency market research source, CoinMarketCap, there are a total of 9,167 cryptocurrencies currently available in the market as of April 2021.
Cryptocurrencies continue to grow rapidly in number. Regarding the total market value of all the cryptocurrencies combined is more than a whopping $2 trillion as of the latest news. Bitcoin, the best cryptocurrency in terms of value, alone holds a market capitalization of more than $1 trillion.
Top cryptocurrencies according to market capitalization
According to CoinMarketCap, a trusted cryptocurrency analytics and data provider, the latest market capitalization for the 10 most valuable cryptocurrencies as of early April 2021 is as following:
Cryptocurrency
Market Capitalization
Bitcoin
$1.07 trillion
Ethereum
$233.9 billion
Binance Coin
$62 billion
XRP
$44.5 billion
Tether
$43.6 billion
Cardano
$38.5 billion
Polkadot
$38.2 billion
Uniswap
$15.5 billion
Litecoin
$15.1 billion
Chainlink
$13.5 billion
Should you invest in cryptocurrencies?
Enough with the stats and definitions, let’s come to the point. Should you invest in cryptocurrencies? It’s a question that any newbie asks after getting all thrilled by checking out the value of cryptocurrencies constantly going off the charts. However, it’s better to hold your horses for a tad moment and know the real deal before diving straight into the sea of crypto as an investor.
The first and foremost misconception that you need to clear out is that no one out there in the crypto world can guarantee that you will make money. If you come across someone who shows you shiny crypto trends and guarantees you a fixed profit, you might want to pass this one.
Cryptocurrency has gotten into the interests of various celebrities and public figures like Elon Musk and others. But, you still can not call an investment safe or good just due to celebrity endorsement. Never invest that money in crypto that you can not afford to lose.
If you have dedicated cash that you can use for experiments, you can always dive into the cryptocurrency market but only after doing thorough research. A key factor to remember is that not all cryptocurrency companies are legit. Numerous scams are going on that you might want to keep yourself safe from. Whenever you come across a cryptocurrency trading company, make sure to check its reputation on the internet before any proceedings.
How to buy a cryptocurrency?
Some of the renowned cryptocurrencies including Bitcoin, Ethereum, and Litecoin are available for purchase in USD. However, other currencies might require you to pay with Bitcoins or any other cryptocurrency as per requirement.
Before you buy a cryptocurrency, you need to have a “wallet”. A wallet is a kind of an online account where you can keep your currency. Usually, a customer creates an account on a cryptocurrency exchange and then transfers real money for buying cryptocurrencies. Consider doing a bit of research to find out the current best crypto exchange for buying cryptocurrencies like Bitcoin or Ethereum.
For starters, you can go for Coinbase, a renowned cryptocurrency trading exchange. You can create your wallet and begin trading Bitcoin and other top cryptocurrencies via Coinbase in no time.
Conclusion
Cryptocurrency has gained a lot of popularity lately and the current leading cryptocurrency Bitcoin is going off the charts in terms of value. However, there’s a lot to understand before you start trading in the cryptocurrency market. Make sure to clear your concepts and be aware of the ins and outs of the crypto world before you take your plunge into it as a novice.
