Almost everyone talks about cryptocurrency everywhere in the world. Despite its fame, there still remains a stigma that surrounds cryptocurrency, and many people are still not very familiar with it. Cryptocurrency is changing the financial world you know today. Having said that, here are some things that you would need to know before you buy cryptocurrency online:
What is Cryptocurrency?
First thing to cover is to know what exactly cryptocurrency is. Cryptocurrency is any kind of digital currency that was generated and supervised via advanced encryption, which is cryptography.
What makes it different from all other traditional currency is that it is decentralized. This means that there is no central bank, government, or any authority that controls the currency. Another difference is that it’s all digital. There are no physical bills in cryptocurrency. It’s only online and being tracked by blockchains, which are records of each bitcoin.
The most famous cryptocurrency right now is Bitcoin, which was created by Satoshi Nakamoto. Currently, it’s being traded abundantly and even accepted as official payment in certain establishments.
What Are Some Things You Need to Know about Cryptocurrency?
1. Cryptocurrency is Volatile
Before you buy cryptocurrency online, you have to go in with open eyes. You need to know that cryptocurrency is volatile, unlike the foreign exchange currency we normally know about. Within seconds, as seen historically, the value of Bitcoin can change drastically.
The value of cryptocurrency is very volatile because any kind of news can trigger the movements. However, this is just seen in the short term. If you take a look at Bitcoin’s charts, it’s actually not that volatile in the long term. To get you started on cryptocurrency, you can check out platforms like Bitvavo online.
2. Cryptocurrency isn’t Traded for Free
One of the reasons why people buy cryptocurrency is to trade it in the market. However, with cryptocurrency, you need to know that there are fees tucked in when you start selling or buying Bitcoin. Each cryptocurrency trading platform has its own fees, so it’s important to check on them and factor in those fees before you start buying cryptocurrency.
3. Cryptocurrency is Traceable
Contrary to popular belief, cryptocurrency is still traceable and not completely anonymous. Even though it’s the choice of currency in the black market, cryptocurrency transactions are still in a public ledger in which all exchanges ever made are recorded. When Bitcoin is in the ledger, information regarding the owner’s name or other details aren’t there. However, you can see where the particular Bitcoin associated with a number is. You will also see who owns it once cryptocurrency is converted to fiat money again.
4. You Can Buy Cryptocurrency with Cash
Cryptocurrency can be bought via credit cards, debit cards, online transfers, and even cash. First, though, you might want to create a cryptocurrency online wallet. You will have your own wallet ID, and this is where all your cryptocurrency will be stored. Just like that, you can use your cash and convert it to cryptocurrency. The value could appreciate depending on the market value of cryptocurrency. You just have to check on the market every now and then to see the prices. Keep yourself posted all the time.
5. Cryptocurrency Can be Mined
If you don’t want to pay for cryptocurrency using your cash, you can actually mine it online. With fiat money, the central bank or government gets to choose when fiat money can be distributed or printed. With cryptocurrency, there is no central authority. Anyone can start mining for cryptocurrency if they wanted to, and they can mine as much as they want.
When mining for cryptocurrency, you need a certain software to solve mathematical problems. The answer for this mathematical problem is usually a 64-digit number combination. Once you get the right one, you will get rewarded with a certain number of cryptocurrency. These mathematical problems are not at all easy, which is why it requires a special software and computing power to be able to solve it.
Don’t you worry about mining cryptocurrency because it’s perfectly legal. Laws on cryptocurrency are continually evolving depending on the need and taxes involved. The legal issue of cryptocurrency usually lies on how people use it and what they use cryptocurrency to buy with.
6. Cryptocurrency is Safe to Use
Like any other kind of currency, cryptocurrency is perfectly safe to use. However, since it’s all online, what you need to worry about is the security of your cryptocurrency wallet. There will be hackers who will try to get your cryptocurrency. So, make sure that you make your cryptocurrency wallet is as secure as possible.
For some cryptocurrency wallets, the company provides you with a physical bill that shows your wallet’s ID number. It’s important not to lose that too. Because if you lose it, it’s like misplacing your physical wallet as well. If you lose that paper, you will also lose your cryptocurrency wallet and all that’s in it.
7. Cryptocurrency Can be Used to Pay for Things
Right now, cryptocurrency is already being accepted as official payment in several establishments, whether online or offline. If you want to use your cryptocurrency to purchase some things, you just need to check which stores accept it already.
For example, Microsoft already accepts Bitcoin as payment using digital wallets. Moreover, some airlines already accept cryptocurrency to pay for airline tickets. In addition to that, you can actually send kids to school or university as well using cryptocurrency. There are some institutions that already accept cryptocurrency as payment for the tuition of children. The list just keeps growing these days. You just need to be aware of which outlets already accept cryptocurrency as payment.
Understanding cryptocurrency is essential before buying it. Now, you should have a better and clearer idea of what cryptocurrency is and the things you have to know before you buy anything. It’s actually much simpler than it looks. You just need to look into it deeper. Hopefully, this discussion was able to clear up some notions or misconceptions about cryptocurrency.