Cryptocurrency – There are numerous cryptocurrencies out there, the popular ones being Bitcoin, Lietcoin, and Ethereum. In addition, cryptocurrencies are becoming popular in the online payments arena. But before you convert your real dollars or other traditional currencies into bitcoin, understand what cryptocurrencies are and how to protect your investments.
A cryptocurrency is a virtual currency, an alternative payment method created using encryption algorithms. Encryption technologies allow cryptocurrencies to function both as a currency and as a virtual accounting system. You need a cryptocurrency wallet to use cryptocurrencies.
Cryptocurrency wallets can be software that gives cloud-based services or is stored on your computer or on your mobile. Here is where you store your encryption keys that identify your identity and link to your cryptocurrency.
The risks of cryptocurrency
Cryptocurrencies are newer than the other markets, and the market is wildly volatile. Cryptocurrencies are not regulate by any bank or any other third party, so they tend to be uninsured and are challenging to convert into some tangible currency like US dollars or euros.
Additionally, since cryptocurrencies are tech-based virtual assets, they are prone to get hacked like any other intangible technological asset, and you are also vulnerable to cryptocurrency scams. Lastly, you store cryptocurrencies in a digital wallet, and if you lose it or lose access to it, you lose your entire cryptocurrency investment.
How to protect your cryptocurrencies?
A leap of faith is exactly what you need to avoid taking here. Understand how the cryptocurrency works, where you can use it, and how to exchange it before you invest in a cryptocurrency. Read the web pages of the currencies themselves to get a comprehensive view of how it works, and read independent articles on the assets you are considering as well.
Use a wallet you can trust
Research and choose the right wallet for your needs. If you decide on managing your cryptocurrency wallet with a local application on your computer or mobile device, you will need to protect this wallet as you would your investment. Lesser-known wallets are risky when it comes to protecting your cryptocurrency. It is possible that it can turn out to be a cryptocurrency scam. Make sure that you are opting for a trustworthy wallet.
You need a backup strategy for when you lose your computer or mobile device where you store your wallet or if you lose access to it or you lose it to a cryptocurrency scam. You won’t get your crypto back without a backup strategy, potentially losing your investment.
Understanding crypto lingo
You need a hefty risk appetite and a whole new vocabulary to invest in cryptocurrency. Here are the fundamentals of crypto lingo to get you started.
Bitcoin was the first cryptocurrency created in 2009. It is by far the most valuable and popular crypto used today.
A blockchain is a digital ledger. It is the key technology used by cryptocurrencies, non-fungible tokens, and other unique digital items. All kinds of information can store on the blockchain, but so far, it has remain mostly used for recording cryptocurrency transactions. A transaction is enter into the public ledger once it is carried out and is managed by a global peer-to-peer network.
Blockchain is essential to bitcoin’s appeal. The decentralize database cannot be controlled by any one person or group.
Buy the f****ing dip (BFTD)
An indication for crypto bulls calls for investors to buy coins when prices tumble.
The eccentric asset started out as a joke based on the “doge” meme in 2013. But with cryptos broadly gaining mainstream interest, dogecoin emerged as an unexpected heavy hitter.
It has a market cap of over $30 billion, and it surged more than 5,000% this year. And dogecoin is still cheaper than its popular kin.
Tesla’s CEO has sparked rallies with his tweets on cryptocurrencies such as bitcoin and dogecoin.
Ethereum is an open-source software based on blockchain controlling the cryptocurrency Ether.
FUD (“fear, uncertainty, doubt”)
In crypto jargon, FUD is the negative information weighing the asset’s value down.
The term is refer to either as a typo that stuck and the abbreviation of “hold on for dear life.” Bitcoin bulls tweet “HODL” while reacting to FUD.
The typo lore dates back to a 2013 post, “I AM HODLING” on the forum bitcointalk. An apparently drunk bitcoin investor ranted about holding onto the crypto while it dropped drastically. This led to memes, and the term became shorthand for an investment strategy.
A process by which new bitcoins are add to the blockchain. It is not for amateur enthusiasts; it requires high-powered computers to solve complex mathematical equations to create a new “block” on the blockchain.
The mining process requires exhaustive computing power and electricity, leading to concerns about bitcoin’s environmental impact.
Non-fungible tokens are pieces of digital content link to the Ethereum blockchain. Non-fungible means one-of-a-kind, which cannot replace like you replace a dollar bill with another dollar bill. NFTS, simply put, transforms digital artworks and other collectibles into unique, verifiable assets.
Cryptocurrencies have set the door open to endless digital opportunities. Whether it is the introduction of ICOs, NFTs, or emerging cryptocurrencies. Anyone with the knack and skill can trade or create their own crypto. Artists are being appreciate in an innovative way through NFTs. However, market risks such as volatility, hacks, and cryptocurrency scams are problems that a trader should acknowledge and prepare for.
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Review Title: A Guide to Cryptocurrency Basics.