Cryptocurrency has been around since 2009, when bitcoin was launched by a pseudonymous programmer called Satoshi Nakamoto. Nakamoto’s big innovation was developed with the intention of verifying secure financial transactions outside the authority of a centralized bank.
Nine years later, there has been a boom of discussion surrounding the confusion of digital currencies. In fact, John Oliver once joked cryptocurrency is “everything you don’t understand about money combined with everything you don’t understand about computers.”
We have answered five simple questions for crypto beginners below. Questions are ranked by complexity.
#5 What Is a Bitcoin?
Bitcoin is one unit of a family of anonymous digital currencies called cryptocurrency. Cryptocurrency is theoretically untraceable and unhackable, however, this has been largely disputed as many cryptocurrency exchanges (more on that below) are centralized.
Bitcoin is the most popular cryptocurrency because it is the foundation of the digital currency movement. Since bitcoin is the most popular, it is also the most valuable. Bitcoin operates similarly to the U.S. dollar in that it is the global standard for evaluating the worth of other cryptocurrencies.
#4 How Do You Get Bitcoin?
You can purchase bitcoin directly on centralized trading platforms like Coinbase.
#3 How Can You Make Money With Cryptocurrency?
The value of bitcoin and other cryptocurrencies change constantly. It is important to remember that this money is an investment and returns will likely not been seen immediately. Experts recommend that newbies invest a small amount initially. Just like any other investment, it is up to the individual to decide when to sell or hold. Continue checking expert resources, like CoinGenius, which empowers traders with real-time data to make intelligent investment decisions.
#2 What Does It Mean to Trade Cryptocurrency?
There are more than 1,600 cryptocurrencies in existence, so you may be interested in investing in emerging coins. To trade bitcoin for ethereum or any other digital currency, consider using an auxiliary like LQDEX Bridge.
Many investors start by trading on centralized exchanges like Coinbase. Centralized exchanges have high liquidity and are fairly easy to use. Centralized exchanges are not flawless, though. Centralized exchanges require customers (called traders) to submit identifying information and private keys (similar to pins) to centralized exchanges. Being centralized, these platforms are prone to hacking – meaning users can lose their entire investment. In fact, more than $15 billion has been stolen from centralized platforms.
#1 How Can You Keep Your Cryptocurrency Investments From Being Stolen?
Unfortunately, computer hacks and phishing attacks can be common in the cryptocurrency space. Look into decentralized exchanges that do not hold users’ funds. On a decentralized exchange, no one can ever access your funds other than you – essentially, your funds cannot be compromised.
There is no way to predict what will happen with cryptocurrency in the future but one thing is for sure: alternative financial institutions are something that millions of people are interested in.