What Is Cryptocurrency?
In the last decade nearly everyone reading this article has heard of cryptocurrency or Bitcoin mentioned, you’ve probably seen it in the news a huge amount. With advances in technology have come changes in how we communicate, shop and pay for things. Increasingly it seems that the government and companies would prefer us to go cashless and use methods such as Apple Pay to purchase items. For example, by waving your phone or card over a machine now you can instantly pay for your goods.
Bitcoin was the first currency of it’s kind to hit the mainstream, so it is the most famous, but now there are lots of other well know cryptocurrencies – in fact there are over 2,000 and counting because more are being developed each week.
After talking to friends, I realised that everyone had heard about cryptocurrency but weren’t really well versed on all the details. So here are some useful bits of information to help you navigate the world of cryptocurrency and make you feel more comfortable the next time it’s brought up in conversation.
What is it?
In simplest terms, cryptocurrency is a form of digital payment that doesn’t need a bank to verify the transaction. People can send the payments from anywhere in the world and it is available for everyone to use.
Whereas you store your cash in your wallet, you store your cryptocurrency in an online digital wallet. The name was given to the currency because each transaction is encrypted – the reason for the encryption is to ensure both safety and security.
Is it safe?
One word you need to understand with cryptocurrency is blockchain technology. All payments are put into blocks and have a time stamp. It’s pretty complicated but the major takeaway is that this technology makes it extremely hard for hackers to interfere.
Transactions are made extra safe because they go through a two-step process to authorise them. So, the user will be asked to login using their username and password. Then they will have to enter in a code that has been sent through their phone to complete the authorisation for the payment.
Tips for investing safely
Here are some tried and tested tips to help you invest in cryptocurrency.
- Research. Before you put all your money into a cryptocurrency you need to do our research about which exchange you will use. There are more than 500 exchanges for investors to choose, get online and read other user reviews.
- Storing your cryptocurrency. When you buy digital currency, you need to store it in a digital wallet. There are benefits and special features that come with different Bitcoin wallets like Luno, so again research how you’ll store it.
- Diversify. Any good investment strategy will involve diversification – this is also true with cryptocurrency. So don’t just load all your investment in to Bitcoin, there are thousands of other options available to you – so diversify your investment.
- Volatility. You need to be prepared for volatility, cryptocurrency can be very volatile so be ready for the market to go up and down regularly, If you can deal with the ups and downs then crypto investment is for you.