Getting started in crypto can be stressful and complicated, we know. from understanding the different uses of crypto, the blockchains they work on and the multitudes of exchanges and wallets that you can buy and store your crypto on. It can be a time consuming task for many, that's why in todays post I will share with you the basic essentials you'll need so you feel safe when interacting with the various blockchains.
What is cryptocurrency?
Cryptocurrency. That topic you keep hearing about on social media and the TV seems to be the trendy thing to talk about these days but what is it? I'm glad you asked. Cryptocurrencies are digital assets that people use as investments and to purchase other things. They are normally purchased using real world currencies, like the dollar or pound to buy 'tokens" or "coins" of specific cryptocurrencies.
Basically, exchanging into cryptocurrency can be compared to exchanging into a different countries currency, as if you were going on holiday - you can't walk into a pizzeria in Italy and pay in dollars, crypto works similar to this
So, cryptocurrency? Cool name right, well where does it come from? It actually comes from the word cryptography - which is the skill of writing and/or solving code. Each particular coin of a cryptocurrency is a unique line of code, meaning they can't be copied and are easy to track and identify as they're being traded.
How does crypto work?
Cryptocurrency is exchanged from an exchange to person and vice versa, person to person also, without any other middleman, like a bank or government body. So, it's sometimes described as the wild west of the internet age.
What we mean by this is it's completely decentralized, which means no bank or government controls how they're produced, how they're traded or exchanged or what their value is.
Cryptocurrencies operate on what is called blockchain technology which is technically just a really long receipt that keeps growing with every transaction of the coin or token that it operates on. It is a public record of all transactions ever recorded, you can think of it as an open archive of the history of transactions on a given cryptocurrencies Blockchain.
How do I store crypto?
There is a variety of ways you can store your cryptocurrency and which one is right for you is going to be dependent on a lot of factors but they are essentially kept inside of digital wallets, these wallets will give you a private key. So, you can keep them stored on the exchange you've purchased them on or you can store it on either a hot or cold wallet - storing your crypto on your exchange wallets carries some risks, as the data of your wallet is generally kept in central servers meaning if there is a data breach or hack, this means your private keys are at risk of being exposed which could lead to significant loss.
So, how do you avoid this? Move your crypto into a hot or cold wallet, they both have their own benefits, a hot wallet is essentially connected to the internet which means transactions generally are quicker than that of a cold wallet but this does mean it could lead to online attacks and potential loss of funds although this is very rare and the biggest risk is yourself, never give out your private keys to ANYONE! A cold wallet has no internet connections so is almost impenetrable. An article dedicated to the best wallets coming soon.
What can I use crypto for?
Well, great question. There's a lot of use cases for many cryptocurrencies some major retailers are accepting crypto payments, as well as the iconic Tesla moment where they started to accept payment in BTC and then backtracked, bloody Elon.
We are still very early days and no where near mass adoption yet so keep your eyes and ears ready for any news that you can buy your favourite thing with crypto. From finance products, borrowing, lending, staking the possibilities with crypto are endless but one special mention goes to the NFT Boom which has made 13 year old artists rich in a matter of hours and has seen some digital pieces fetch in the millions of dollars.
What should I know before I invest in crypto? 3 things to know before you invest
Cryptocurrencies can be very unstable - Yes it's true, you may have heard countless times from friends, relatives or even the news about how speculative crypto can be, you never really know if its going up or down and on some days you can expect massive rises but also just as big falls. Always keeps this in mind when investing in crypto. A little hint, swap your crypto to stablecoins in times of uncertainty… stablecoins are pegged to specific real world currencies, more on them later.
Never give out your seed phrase or private keys - In any circumstances, who ever asks just tell them no, it's not worth the hassle or loss, many people have been victims from their own negligence which in turn gives crypto a bad name, if you don't feel comfortable investing in crypto then don't do it until you have a good enough understanding, be safe and be smart.
DYOR - In the crypto world you will hear this term a lot, from people hyping their own projects to Youtubers who give their opinions. It means do your own research, it means what it says, never take anyone's word for what to invest in, always look at all the info regarding the crypto your investing in. Read whitepapers, check trading volumes, check market cap, check volatility. check everything you can!
What is a stable coin?
A stable coin is a cryptocurrency which is pegged to a specific real world currency, the most popular being the us dollar tether (USDT), because stable coins are pegged to a real world valuation of a specific currency they are far less volatile, one of the perks of stable coins being in the crypto space is that during times the market takes a down turn you can trade your crypto for USDT and if you time it right you could even find yourself increasing your holding following this method.
Should I invest in cryptocurrency?
I'll try keep this one short and sweet, yes, yes you should. Don't get left behind, mass adoption will soon be in place. We can already see nations opting for digital assets, institutions are gaining a foothold and people are being left behind.
Don't invest in stupid shitcoins and always be vigilant, never give out your private keys or seed phrase and always, always DYOR.
*DISCLAIMER: this is not financial advice and is for educational purposes only.