A BEGINNER’S GUIDE TO CRYPTOCURRENCY INVESTING
Blockchain is a type of distributed ledger technology that was invented to solve the problem of trust. In traditional transactions, a centralized third party called an intermediary, such as a bank, is involved in confirming the details of the transaction and the parties involved. This third-party verification means that the transactions are secure, but it also means that these third parties can charge hefty fees for their services, and it often takes several days to process a transaction.
Blockchain, on the other hand, cuts out the middleman. Instead of having one central authority, it decentralizes the process, which means there’s no single point of failure and no fees. The blockchain is updated and verified by multiple people at the same time.
Cryptocurrencies are all the rage right now, with the value of Bitcoin skyrocketing to over $20,000 a coin late last year and the value of other cryptocurrencies like Ethereum and Litecoin following closely behind. Virtual or digital currencies are nothing new, though, and have been around since the 1990s. Some of the first online games and virtual worlds, like The Realm Online, had their own virtual currencies that could be used to buy in-game items or services. These “currencies” worked just like their real-world counterparts, except that they could also be traded for goods or services outside of the game.
When people talk about cryptocurrencies, they often reference the volatile, unpredictable nature of the market. Although that may be true, it ignores a simple truth: the cryptocurrency market is still a primitive form of market, and its volatility is still far ahead of the stability of the stock market, the gold market, and the dollar market. While the market is still growing, there are plenty of ways to invest in it.
Cryptocurrency has grown exponentially in value over the past few years, and it looks like it will continue to do so as more and more people learn about the potential it has to transform the global economy. One of the most important things when hearing about a hot new topic like this is to find a trusted source to learn from. (For example, you might turn to a trusted friend or a trusted, reliable news organization for advice on law, or a trusted plumber for advice on your pipes.) One of the best places to get reliable advice on cryptocurrency is one of the online communities devoted to it, like bitcointalk or the /r/bitcoin subreddit.