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Cryptocurrency for beginners – get started with investing

Cryptocurrency is fast becoming an in thing especially among the young generation who understand the great possibilities of financial technology (often called fintech). If anyone had doubted what else tech gurus can do then there could never be a better answer than the 2009 ushering in of bitcoin into the market.

Since its creation in 2009, people have deliberately invested in trying to know more about bitcoin and the other altcoins which have emerged later on. Even for someone who is not essentially interested dealing in cryptocurrency, it’s good not to be entirely ignorant about them. Take a little time to learn a bit of what they are, how they work, what they portend for the fiat money that we have always known used to buy?

Aside from the fact that cryptocurrency is a digital currency that removes control from a fiat agency such as central banks and governments, it is also an asset. Different from the fiat money  which we have always only known as being legal tender for buying goods and services in the marketplace, crypto has an extra utility as an asset just like other common stocks, though with subtle differences.

Satoshi Nakamoto, who is this?

It may interest anyone to know about who really came up with cryptocurrency as a concept and reality. To better get an answer to this question, it is important to first appreciate the fact that bitcoin was the first cryptocurrency offering to entre the market in 2009. Meaning that we have to quickly narrow down to unmasking who really was behind bitcoin creation?

So much has been written about bitcoin with new information coming up each passing day. Unfortunately, every emerging information has been around how to work with bitcoin, the dos and don’ts et cetera. What remains unclear is the entity that created bitcoin. But there is a mysterious name that has always featured so prominently, that of Satoshi Nakamoto, as having been the creator of bitcoin.

Up until now, the whole world is betting on luck to unravel the actual elusive faces behind bitcoin. However, in the meantime, we have to focus on doing other important things like exploring cryptocurrency objectively.

A little on the history of Currencies

Cryptocurrency is relatively a new thing in the market today which actually makes it genius to first trace the background of how money came to be. It is from understanding how our common paper and metal currency works that a better understanding of cryptocurrency can be drawn.

Money or currency as we know it today, replaced the traditional barter trade. The first currencies were commodity money in the sense that they got their intrinsic value from high prestige precious minerals, especially gold. Later on, this system as again replaced by representative money which drew its value from its ability to buy an actual commodity in the market. In this situation, the currency of any country was tied to a fixed amount of gold which became famously known as gold standard.

As things stand today, the notes and coins currency are stored as credit money in electronic records held on bank databases or any other financial institutions recognized by fiat agencies. So, whenever you perform a transaction using this fiat money, the fiat agency controls its value. Check out there for more on the history of currency.

Cryptocurrencies do what paper and coin money does and even more

A real source of anxiety about cryptocurrency today is about its reliability as a legal tender and investment option. These concerns are legitimate and requires anyone to invest in knowing why cryptocurrency represents a progression and not a setback.

Just as a reminder, cryptocurrency bears all the qualities and attributes of traditional money with even more offerings. It is a representation of the possibilities of technology to ease transaction and make the buy-sell process as convenient as possible.

So, cryptocurrency has the following attributes that directly compare with our common money; scarce, durable, portable, divisible, easy to recognize, easy to store, fungible and hard to counterfeit. However, being a new currency, bitcoin which was the first crypto offering to land in the market is still trailing traditional currencies on the aspect of widespread use.

What does cryptocurrency stand for?

Cryptocurrency is by any means an intriguing topic as it represents yet another shuttering of glass ceiling in financial mobility, getting to understand the critical details isn’t always a walk in the park. The difficult jargons and terminologies used in the crypto world may be mind boggling and confusing. To get this important information in simple, easy to understand format, you can trust this synoptic text.

You hear people make large sums of money by investing in cryptocurrency, that they hold bitcoins in their digital wallets. Recently when Russia invaded Ukraine, you possible picked the anxiety among cryptocurrency investors and wonder what exactly bothers them about a war being fought miles away. They are not crazy; cryptocurrency investors hold a digital currency whose value keep rising and falling in response to major global shocks such as war. So, lets get on a learning spree about cryptocurrency proper.

So, what is cryptocurrency

Cryptocurrency is digital money which means that it is a creation of financial technology and is transacted online.  It is not possible to touch and feel cryptocurrency but then trading in and buying with it happens every day.  Blockchain is the technology that anchors cryptocurrency and provides the platform for every transaction in it.

Traditional paper and metal currencies that pass through the normal banking system are controlled by banks and governments. Such currencies are called fiat currency which is not backed by any specific commodity such as a precious mineral. On the contrast, cryptocurrency is a distributed ledger which means that no government or specific agency controls it.

Cryptocurrency is created by a highly technical and intensive technique of cryptography. Cryptography allows transactions to take place securely along the crypto blockchain. On a dedicated blockchain, it is possible for people to engage in the buying, selling and trading crypto.  If cryptocurrency was to directly compared to the traditional financial system, then blockchain would be like a bank or government agency that keeps track of every transaction.

A little about Cryptocurrency blockchain

By now, you probably have an idea that while the fiat currency records are held by financial institutions that regulate transactions on them, cryptocurrency is a distributed ledger. Being a distributed ledger, it means that no one entity has exclusive control of transactions that happens there and everyone with a digital wallet for a specific currency is issued with a pin that enables access to the blockchain.

On the contrast, blockchain is a distributed ledger that is shared among the nodes of a computer network. The blockchain technology that is the backbone of cryptocurrency maintains a secure and decentralized record of transactions.  Whenever a new currency is mined, it is introduced onto the blockchain for investors and buyers to access it. While on the blockchain, there is a very high sense of transparency as everyone with a personal node of crypto explorer can see what transactions are ongoing.

Creation of blockchains is not done just for the sake of it but as a means of securing and keeping track of every cryptocurrency transaction. Previous attempts at creating purely digital currencies hit a snag due to the difficulty in enforcing forgery but blockchain has won the battle. It has a highly advanced system that prevents people from making multiple copies of their digital currency holdings thus preventing double spending of the same coin.

Learning more about cryptocurrency blockchain requires a lot more time especially the technical aspect of it. The whole concept about how the programming works, monitoring of transactions and algorithms used is a real fog of adjectives. You can however check out here for more on the technical information about blockchain technology.

Cryptocurrency is different from your ordinary fiat currency

A question that lingers in the mind of anyone at the verge of making a transition from fiat currency to cryptocurrency is why the need? Like any other cases, its common for people to initially act with caution until when really sure that there are no risks lurching around the whole issue.

It takes real boldness and information to really get adequately convinced that cryptocurrency could juts be on its way up to becoming a currency of the global future. So, the sooner we know what progress crypto brings over and above the notes and coins money, the better.

This is how cryptocurrency is created and launched

Although not so many people take time to think about how the money they own come to be, it satisfies to at least have some idea. Ordinarily, fiat money is either minted or printed by a certified press. For cryptocurrency, the process is a little different. Cryptocurrency miners that can be a consortium or team work together using blockchain technology and cryptography to create a new currency.

Cryptocurrency essentially came to cure the problem that previous attempts at creating a purely digital currency faced. The problem was that it was difficult to prevent double use or replication of the same currency. So, what cryptocurrency does is to apply complex mathematics to decrypt and protect transactions that have been performed across its network.

To better understand the process of cryptocurrency mining, let’s take the example of bitcoin. Bitcoin miners can work in pools to solve mathematical puzzles. Using computers (called nodes) that have specialized chips, the miners who solve the mathematical puzzle first gets rewarded with a bitcoin which then becomes part of the block and their ownings. This complex mining process also confirms transactions on the cryptocurrency’s network thus making them trustworthy. It may help to learn more on cryptocurrency creation here.

It is necessary to know that some cryptocurrencies such as bitcoin have their dedicated network while others operate on shared networks. This is best demonstrated by the fact that while there are more than 1,000 blockchains today, they are served by at least four types of blockchain networks.

This is why cryptocurrency was created

Cryptocurrency today is almost becoming a buzz word to say the least. If people are not talking about it as a pathway to quick riches, then it’s a group of individuals lamenting after falling to fraudsters in the industry. What this means is that what can be said about cryptocurrency ranges from very positive on one end to extremely negative on the other.

In most cases, the talk about cryptocurrency makes it appear more of an asset for investment, which is actually true. People have largely viewed cryptocurrency using the lenses of it being a worthwhile investment option where someone can playa round volatility to reap big. Of course, so many people today can trace their riches to crypto investments that worked out as expected.

So, what was the real motivation for those who created the first cryptocurrency which over time has mutated to the over 18,000 cryptocurrencies in existence today? The answer to this question can be explained by the sentiments purported to have been given by the faceless and mysterious Satoshi Nakamoto, the creator of bitcoin. Written text alludes to the fact that cryptocurrency was primarily intended to be a way to facilitate online buying and selling. Cryptocurrency was intended to eliminate bureaucracy surrounding online buying as marketplaces quickly shift online.

Available cryptocurrency offerings

Everyone has an almost equal chance at getting involved in cryptocurrency investing or buying. However, this process must begin with a proper understanding of what cryptocurrency is in general and especially which crypto options exist. It is foolhardy to be overambitious and end up investing just so blindly.

Bitcoin is probably the most widely known cryptocurrency. In fact, when cryptocurrency is mentioned, what quickly come to the minds of even the most informed people is bitcoin, thanks to its having been the first digital currency to have ever been created and launched.

Bitcoin stands out as having opened up the space for many others to emerge. Any other cryptocurrency that was created and launched after bitcoin falls in the category of altcoins which are many at the moment. So, to believe that cryptocurrency and bitcoins are synonymous is to miss the point.

Here is the list of cryptocurrencies available today that anyone can buy, trade in or swap to. Each of them has their own advantages and disadvantages which should inform anyone’s choice. The various available cryptocurrencies today and their recognized acronyms include;

Additional information about the market performance of these currencies plus their individual attributes will help act as a guide for you to choose. It would have been a good thing for us to provide a clear indication on which of the cryptocurrencies to go for but because that decision depends on an individual’s goals, the best thing to do is check out the description of each cryptocurrency offering here and match them with your goals until a perfect one come out-that is the one to go with.

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The use of cryptocurrency

People already have access to paper and coin currency that are essentially regulated by governates and controlled banks as intermediaries. The big question at the back of most people’s minds then becomes why the need to give any attention to cryptocurrencies? Aside from the fact that they are digital money that operate autonomous of government control, what else makes them more than our ordinary money?

In the concept of Satoshi Nakamoto, the creators of bitcoin whose details remain unclear, bitcoin was created to offer alternative payment system outside the bureaucratic regulation of any central control. On the other hand, Ethereum was created for the purpose of facilitating immutable, programmatic contracts and applications.

Each of the cryptocurrency offerings today has a particular reason behind its creation which is also a mirror of their respective strengths over the others. As an advice, it is proper to dedicate sometimes for reading particularly on what each altcoin stands to solve and in what ways before settling on investing on them.

Aside from the respective thinking behind the creation of each cryptocurrency, here is the common stuff you can always do with your crypto ownings.

Cryptocurrency as a mode of payment

The primary reason for creation of cryptocurrencies in all their names is to facilitate online payments. Although businesses had been initially too reluctant to recognize cryptocurrency as an alternative mode of payment, today many are slowly taking it.  Today, you can buy software, jewellery, apparels, visit restaurants and take flights through cryptocurrency payments.

Generally, the uptake of cryptocurrency payments has been disturbingly slow but surely, its incremental. There is a promise that when the information about them become clearer and trust levels increase, more and more online businesses will embrace cryptocurrency payments. When this point of widespread cryptocurrency payment is achieved, it will be a great game changer.

These are the major businesses that today will allow you to use cryptocurrency as a payment option;

If this trend of crypto payment growth is anything to go by, we can confidently conclude that many more businesses will join the fray. This increased use of crypto will only point to one thing and that is, the demand for the currency will shoot up and early investors may just hit a jackpot with crazy margins. No wonder daredevil investors will not refrain from betting on chances at times when cryptocurrency is facing turbulence.

Cryptocurrency as an investment option

Apart from being a payment option for online transactions, cryptocurrency has gained traction and admiration from many as an investment option. More than 80% at the least engage with cryptocurrency not as a means of payment but an investment with the high risk that implies.

If cryptocurrency is almost a replica of the money we know, why then should anyone look intently at it as a possible investment. How crazy an idea for someone to think of investing in money as an asset instead of putting it in well known assets or stocks? The answer is that cryptocurrency is not your ordinary currency, it is volatile and very much limited in supply. It is this volatility that investors work around to reap big – but with the risk of losing it all (as we have seen many times over and over again). Some succeed – many fails – like in all other markets like CFD’s, Stocks, Commodities and other investment options.

Cryptocurrencies are very sensitive to major global trends in politics and economy. For instance, during the early phase of the Russia invasion of Ukraine, Bitcoin and the major currencies recorded a significant fall before revamping to attractive values. Such trends result in a rise or fall in the prices of cryptocurrency. The whole idea in investing on cryptocurrency is changes in its supply and demand which create an opportunity for investors to make profits – like in any other market.

Cryptocurrencies are often known for their unique autonomy compared to traditional money. It does not depend on the financial rules and regulations which then allows a lot of flexibility and creativity for investors. Because an investor has a full access to their finances, they can then tweak investment choices on a minute-by-minute basis without having to consult with any third-party agency. You can trade cryptocurrencies 24/hours a day, 365 days a year..This also implies that in those countries cryptocurrency is not regulated – you will actually lose all your money if the investment fails.

Buying first crypto

People look at cryptocurrency from different perspectives. For some, cryptocurrency offers them more control over their transactions since it eliminates the need for an intermediary financial institution. They can therefore initiate transactions and it be completed easily. The same ease and control are also evident when performing swapping of cryptocurrency or changing diversifying investment portfolio.

To others, cryptocurrency is an asset that which they can invest, trade in and make great margins. This is actually true for many people today who simply buy a cryptocurrency of choice, be it bitcoins or altcoins when they are cheap, wait for an increase in demand then sell high. Through playing around with the volatility in the cryptocurrency market, intelligent investors really have the possibility to rake in hundreds of thousands if not millions in margins. But then you need a good portion of timing, understanding of the market and also knowing what you do with regards to upsides and risks.

Whether interested in venturing with cryptocurrency to facilitate transactions or as an investment, the first step is obviously to buy them. Being that cryptocurrency only come to life after they have been minded and added to the blockchain, accessing them is primarily through mining. However, mining is out of reach of almost everyone interested in crypto. So, the next possibility is through cryptocurrency exchange.

A cryptocurrency exchange is a typical broker that allows people to use their fiat currency to buy a share in the blockchain. Here, they will create a digital wallet, fund the wallet with fiat currency and then decide what quantity of crypto to buy. The selected exchange will then act as an initial point of contact with crypto after which the buyer gets unfettered access to the purchased cryptocurrency holdings.

Crypto exchanges

As a starting point or a baseline, anyone interested in cryptocurrency venture needs to have a fiat currency to exchange it with. The understanding here is simple-you have your ordinary coins or notes in a bank account or cash. It is this money that must be exchanged for an equivalent of cryptocurrency of choice. At the center of this exchange process is a cryptocurrency exchange.

Simply put, a cryptocurrency exchange is a platform that allows people the chance to buy, sell or swap cryptocurrency. Although with some nuanced differences, a crypto exchange more or less acts as a bank save for the fact that all their operations are online based. You do not have a chance to walk into a cryptocurrency banking hall for a transaction. Instead, you choose from the many exchanges available, create a cryptocurrency wallet, provide the fiat currency funding before starting the whole process of transactions.

The mere fact that there is more than just one cryptocurrency exchange in the market today yet they have a listing of almost the same crypto offerings tell something. It means that no one of them will meet the needs of every customer. It would therefore be wise for anyone to start by assessing what their cryptocurrency goals are before choosing which of them to go with at a particular time.

Some of the prominent cryptocurrency exchanges today include;

At any point when you need to perform a cryptocurrency transaction, it would be well thought out to be clear in what goals stand out for you. Next is to assess the performance of leading exchanges and then match these two sets of information. At the end of the day, a selected crypto exchange must present the highest chance of meeting your selfish personal goals. Remember nobody gets into the volatile crypto market for fun but as a way to rake in fortunes. So, there is never a room to take chances with the most primary thing of choosing a best suit cryptocurrency exchange. More on the considerations for selecting a best crypto exchange is available on this website.

Cryptocurrency wallet

In cryptocurrency transactions, what people ordinarily know as banks or financial institutions do not feature anywhere. What this means that there is a process that must be followed to access the first set of cryptocurrencies from a chosen exchange.

A cryptocurrency wallet is a safe place where people can reliably store their proof of ownership of any crypto ownings. The wallets can be in different ways including physical hardware devices or computer-based software. Aside from offering people a safe custody of their crypto ownings, a digital wallet also gives them great control over their digital currency.

You will as a matter of necessity have to create a digital wallet at the start of your long and winding journey with cryptocurrency. If a bank account is to fiat currency, then digital wallet is to cryptocurrency. I believe this sufficiently gives a matching comparison of the two. In case you are just starting to make the first step onto cryptocurrency dealings and getting confused with the not so obvious necessities, here is a list of some of the trendy crypto wallets for your choosing.

 General Information about cryptocurrency

By any standards, cryptocurrency is still on its twilight years as so much is yet to be clear. Actually, people are learning on the go which then means we live to face the risks as they come and benefit from returns when they do. It is not certain whether cryptocurrency will spell doom for fiat currency as we know them or the global financial system will quickly move to stem its growth. Whichever the case, we have cryptocurrency today and there is obviously something we can do with it as it lasts.

When getting drawn to venture into cryptocurrency investments or trading as it were, its advisable to spend valuable time learning the mistakes that make people fail as well as the winning tricks. If you focus on the naysayers and give a deaf hear to the great hurrah of the many that draw fortunes from crypto then you run the risk of missing out. But in all, follow your gut instincts and invest what you are very ready to lose.

Cryptocurrency investment and trading is not always a bed of roses. People lose money, big money for that matter yet some reap big. So the key to successful crypto investing is to master the craft and put most of not everything under control.

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