Cryptocurrency is the buzz word in monetary circles around the world. What is crypto? Where did it come from?
Trade in crypto is rumored to have started when a group of computer geeks reinvented the process of trading goods and services for monetary compensation. So, in 2008, Bitcoin, known in trading circles as BTC or XBT, emerged. This heralded an era of using digital, online currency known as cryptocurrency.
Cryptocurrency essentially works like a comprehensive online ledger managing and recording transactions securely. It keeps track of digital cash used in economical transactions, in terms of monetary units. In layman’s terms, it records what is spent and what is earned (virtually), in a big old folder in cyberspace. Learn more about cryptocurrencies here: https://www.nerdwallet.com/article/investing/cryptocurrency-7-things-to-know.
HOW SAFE IS TRADE IN CRYPTOCURRENCY?
It is important to know that trading in crypto is regarded as an unsafe undertaking as far as investment goes. Although trading of cryptocurrency is legal in the US, countries such as China have banned it completely.
Crypto tokens are bought on the premise that the value of investment may (or may not) improve. This is particularly true of ICO (initial coin offerings). Startups sell interest in a new cryptocurrency, in order to raise capital for other ventures. Experts caution that investors should not commit more than they can comfortably afford to lose – certainly less than 10% of the investment portfolio available. The crypto market is unpredictable compared to regular stocks and bonds investments, and prone to rapid, volatile, often negative changes. More about actual prices of crypto visit Finscreener
Blockchain
To give a measure of security when transacting in cryptocurrency, Blockchain technology is employed. Blockchain is a decentralized data coding system that records client transactional data, whilst safeguarding against hackers, theft, or data being edited in any way. Blockchain technology renders transactions infinitely traceable, and allegedly removes the occurrence of human error.
More safety tips
Prospective cryptocurrency buyers are advised to check out the company they plan to invest in. Who is the owner? Do other reputable investors believe in this crypto? Find out whether the deal will give the buyer ownership of shares and whether it is a developed venture, or a bid at raising capital.
Note that crypto transactions are not insured by the Securities Investor Protection Corporation – with regard to exchanges or theft. Transacting is completely at buyers’ own risk and discretion.
Always transact using a private, secure internet connection. Online trading is generally conducted on secure platforms. Why change now?
INVESTING IN CRYPTOCURRENCY
Open an account
Before experimenting with cryptocurrency, set up an account. You will need to provide your personal details as well as your identity document. Blockchain technology will keep your data secure.
Where to buy and how much to spend
Crypto is available from exchanges, stockbrokers, or via peer-to-peer exchange. Watch this video for more on cryptocurrencies and how to invest wisely.
Exchanges such as Coinbase, link transactions to bank accounts and offer adjustments in the purchase price. However, an excess of public trading facilities offers a large range of terms with regard to withdrawal fees, transaction fees, and minimum purchase prices. Shop around to find the exchange that meets your needs.
Old-school stockbrokers are less prolific in crypto trading, but platforms such as Robinhood, offer a more traditional trading experience.
Other trading options include Bitcoin ATM and peer-to-peer exchanges. Confident, professional traders opt for Bitcoin Futures, while Grayscale Funds acts as asset manager on a more public, over-the counter platform.
POPULAR CRYPTOCURRENCIES
Bitcoin
Bitcoin is the leading cryptocurrency in the world and currently accounts for the bulk of the total value of crypto. All crypto tokens are interchangeable with and linked, to Bitcoin.
Other online traders include Coinbase, Ethereum and Trade Station, to name a few.
APPLICATION OF CRYPTOCURRENCY
Company specific cryptocurrency tokens are spent on a particular company platform. However, as technology evolves, the commercial applications have become numerous and varied. One example of the versatility of cryptocurrency is PKT virtual currency.
MANAGING AND STORING CRYPTOCURRENCY
Managing cryptocurrency can be a tricky business. Crypto owners may prefer day trading, (buying and selling as the value strengthens), or settling in for the long run. Trading crypto inherently means that someone has to pay more for coin than the original buyer did. It may be a waiting game. So, what are the options for keeping crypto safe while you wait?
Cold wallet
Cold wallet storage is done via an offline, encrypted, portable device managed by the owner of the wallet. The facility shows no presence on the web and is less vulnerable to hacking or theft. Trezor and Ledger Nano offer cold wallet storage services depending on how much investors want to store.
Hot wallet
A hot wallet is an online way to store Bitcoin safely through a trusted exchange provider. It may be accessed via a browser or an app, and is connected to the internet. Hot wallet services will pay out profits instantly, but some speculate that this may not be the most secure option, as accounts may be hacked and looted. Coinbase, Electrum, Blockchain and Mycelium offer hot wallet facilities.
As the technology encompassing crypto keeps evolving, incorporating tax laws, as well as custodial and regulatory access, it may become the currency of the future.
