Although cryptocurrencies are a widely discussed topic all over the world, there are still some misunderstandings. Believe it or not, there are still some people who don't know what cryptocurrencies are or how they work.
So today, we are going to have a look at some popular topics and questions people ask on the internet, and we will answer them.
What is cryptocurrency?
Of course, when it comes to cryptocurrency basis, this is one of the most commonly asked questions.
Cryptocurrency is a digital, decentralized form of currency. Today, different cryptocurrencies can be used for purchasing goods, as well as a potential store of value. All cryptocurrency transactions take place online, and they are not backed by the government. Users are the ones who maintain it.
All cryptocurrency transactions are recorded on a permanent record called blockchain. For changes to be made on the blockchain, the majority of users must approve it, and this is what makes the blockchain a highly secure form of record.
What is the use case of cryptocurrencies?
We have already discussed some of the most popularcryptocurrency use cases.
Anyway, the original purpose of the first cryptocurrency - Bitcoin, was to create an electronic cash system for people to use.
Although cryptos are not widely accepted yet, we can buy some goods and services with them.
The volatile nature of the digital currencies makes them an interesting and sometimes profitable investment. Lots of people buy cryptocurrencies with the only hope to make profit after it increases in value. Bitcoin is a great example of such cryptocurrency - in 2013 it was worth $200 and today its price is around $41 000.
How to invest in cryptocurrencies?
Usually, when people become familiar with the basics of cryptocurrencies, comes the next question - How to invest in crypto?
Maybe, the hardest part of the whole process is choosing the right currency to invest in. Experts suggest it is best to buy Bitcoin or Ethereum, but there are many other digital currencies on the market to decide from. It is important to remember that investing in cryptocurrency is always a risky process, so you need to make an informative decision before you take action.
When you are aware of all the opportunities and risks, you need to decide a crypto exchange, where you can buy and sell crypto. After that, you need to fund your account with USD or other fiat currency, and then trade it for the chosen cryptocurrency. When you’re done, you can either keep your coins within the exchange, or move them to your wallet.
What cryptocurrency to invest in?
As we said, experts propose you invest in currencies like Bitcoin or Ethereum, which are the largest cryptocurrencies by market capitalization. Although they are volatile, they are considered to be less risky than other cryptocurrencies.
Altcoins, for example, are created to be more eco-friendly than Bitcoin, so they are a better means for transactions. On the other hand, those cryptocurrencies have a smaller chance of growing, so they can be a risky investment.
Important thing to remember is, never invest more than you are willing to lose.
What is the future of cryptocurrencies?
Another commonly asked question is, what does the future hold for cryptocurrencies. Considering the fact that some big companies already accept payments with crypto, we are able to believe that using digital currencies will become more common in the future.
The U.S. government is considering the creation of a central bank digital currency, which will operate using blockchain technology. It is going to be centralized and backed by the Federal Reserve, so it is going to be much more useful.
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