This is 2021, but the journey of the revolutionary payment method started in 2009 when a person or group of anonymous people called Satoshi Nakamoto created the first-ever cryptocurrency and named it Bitcoin
Bitcoin is the most popular cryptocurrency with the highest market cap, which began with a price of a few cents in 2010. In early 2021, its price skyrocketed to an all-time high of $65,000. Clearly, cryptocurrency has much to attract the attention of the entire world.
People ask me all the time, what is cryptocurrency?
Is it a scam?
and is it too late to get involved?
Well in this blog, you will find out the answers to all this and more and how to make your first trade.
So, let us dive in!
What is Crypto?
Cryptocurrency (or “crypto”) is a digital currency that was designed as a medium of exchange that uses cryptography to secure and verify transactions. Cryptography is a practice of protecting information and communications by converting them into a secure format i-e codes.
Cryptocurrency is backed by blockchain technology. It is a decentralized, distributed ledger technology that records information in such a manner that it becomes nearly impossible to change or cheat the system. The entire network of blockchain is spread across many computers (nodes) that manage and record transactions.
How Many Cryptocurrencies are Out There?
There are more than 6000 different cryptocurrencies publicly available as of 2021. The following are top 10 cryptocurrencies by price, tracked by CoinMarketCap (a cryptocurrency data provider).
What are the Advantages of Cryptocurrency?
Figure: Advantages of Cryptocurrency (source: Pinterest)
1- Free from Central Authorities
In the traditional financial system government and central banks are in authority. They tend to reduce the value of money over time via inflation.
A distinct feature of cryptocurrencies is that any government or central authorities do not issue them. Therefore, they are immune to any kind of government involvement.
2- Easy and Confidential Transactions
In traditional business dealings intermediaries such as agents, brokers, and legal representatives can make your work complex. You have to go through paperwork, brokerage fees, or other special requirements which may apply. Paperwork involves errors and there are chances that someone may change it or steal it.
On the other hand, cryptocurrency removes the need of a middleman by allowing one-to-one transactions on blockchain ledger which is highly secure and immutable. Only you have control over your account and can view your transactions history.
3- Potential to Bank the “Unbanked”
According to the World Bank Report published on April 19, 2018, there are around 1.7 billion adults (31 percent of the adult population) that did not have bank accounts in 2017 worldwide. It is probably due to strict bank requirements or living in far off areas with no banking opportunities.
Crypto transactions do not ask for filling your personal information and can be sent or received using a mobile phone no matter in which corner of the world you are.
Can You Still Earn Money by Investing in Cryptocurrency in 2021?
Although cryptocurrencies have been around for 11 years, they have created many millionaires and even billionaires. At the same time many people have lost considerably. So, is it still possible to make money by investing in cryptocurrency? The answer is YES!
The following are different ways you can invest in cryptocurrency.
1- Buy & Hold
Figure: Crypto HODL (source: Investopedia)
You can buy a cryptocurrency and hold your assets for an extended period to earn profits from long-term value appreciation. This strategy is known as “Hodling” in the crypto space.
It is difficult to say for how long you should hold a cryptocurrency, but it is always recommended to hold for a long period.
2- Crypto Lending
Figure: Crypto Lending (source: education.puremarketbroker)
In crypto lending, you can lend your assets to borrowers in exchange for the dividend. So, you can earn extra without actually selling your crypto. The borrowers deposit cryptos as collateral which guarantees the security of your assets. The amount of returns you can earn from crypto lending depends on which cryptocurrency you are lending.
There are several crypto lending platforms such as Celsius, BlockFi, Crypto.com etc.
3- Crypto Mining
Cryptocurrency mining is a process through which you can earn cryptocurrency as a reward for solving complex computational puzzles by using computers.
Cryptocurrency mining involves two steps.
1- Validating data blocks.
2- Adding transaction record to blockchain
For crypto mining, you need a powerful CPU / GPU. However, if you got a PC with 6GB or 8GB GPU, you can easily use it for mining purposes. You can check out our Interstellar Meteor, which can help you earn $2497 in just 14 months if you mine Ethereum.
When specially mining Bitcoin, it is called Bitcoin Mining. The following figure shows how Bitcoin mining works.
Figure: Bitcoin Mining (source: edureka.co)
How Do You Buy Cryptocurrency?
You can buy cryptocurrency from one of the many trading platforms available and this can be done quickly and easily.
First you have to place an order for your desired cryptocurrency and this can be done with a convenient payment method such as bank transfer, PayPal, credit card, debit card etc using your local currency but in some case for more obscure coins you may have to trade to Bitcoin first then trade to your desired coin.
Also note that although each of the trading platforms have hundreds of different coins on their exchange, no one trading platform has all the coins, so you may find that you have to sign up to two, three or more platforms.
The following are my top five trading platforms and most coins can be found amongst these exchanges.
- Huobi Global
Once you have purchased the cryptocurrency that you wanted, you can leave those coins on that trading platform to make further trades to other cryptocurrencies or trade back to fiat currency and withdraw. Or if you decide you want to hold onto those coins for a while (Hodl) then the final step is to store them in a secure wallet.
There are several types of cryptocurrency wallets out there such as software wallets, hardware wallets and paper wallets. Each of these options have there advantages and disadvantages but my personal choice would be an online wallet, even though this may leave you vulnerable to online hackers it is indeed the safer choice in the long run.
Using an online wallet can also have many features and benefits which vary from wallet to wallet, often they come with a handy mobile app so you can constantly check on your coins, with some wallets offering bonuses or free cryptocurrencies or ICO tokens in lieu of storing your coins with that wallet, in the same way a bank would give you interest on your money.
Are Cryptocurrencies Legal?
Many developed countries such as the U.S, Canada, and the U.K. allow cryptocurrency use.
In El Salvador cryptocurrency has a legal status. In June 2021, a Bitcoin Law was passed by the Legislative Assembly of El Salvador, which gave cryptocurrency a legal tender within El Salvador.
In contrast, some countries such as China and Russia oppose Bitcoin and cryptocurrency.
How Can You Protect Yourself as a Beginner in the Crypto Industry?
You have to be really careful when you step into the crypto space. It might scare you in the beginning, but it is important to understand that your single step can make you earn a lot and lose substantially as well. So, do not forget to stick to the following things.
- Always choose a well-reputed platform for investment.
- Never invest more than you can afford to lose. Because crypto is not always a win-win game.
- Do not fall for the offers that are too good to be true. Fraudsters surround the cryptocurrency market. So, always be careful.
- Take small steps and be consistent.
- Never share the private keys of your digital assets.
- Always do homework before making any crypto investment.
- Keep educating yourself to learn more about this incredible ecosystem.
What is the Future of Crypto?
There are people still sceptical about cryptocurrency, but the truth is that crypto is here to stay. Sooner or later, these people will also realize the importance and use cases of cryptocurrency. Many countries have started creating their own cryptocurrencies, which gives them more legitimacy. Numerous businesses around the world are accepting cryptocurrency as payment.
With its rapidly increasing acceptance, it is clear that crypto will indeed have a bright future.
We hope that you liked our thorough crypto beginner’s guide. You can check out our other articles as well.
Stay Safe. Stay Tuned!
Can I mine Bitcoin with CPU and GPU?
No, Bitcoin can only be mined with ASIC miners such as the ever popular and never available, Bitmain Antminer. GPU and CPU can be used to mine coins like Ethereum or Monero etc.
What can happen if I accidently share my private keys?
Giving away any keys whether it’s house, car or Cryptocurrency wallet keys is a bad idea. If someone have your private keys, they can access any device or encrypted files protected with these keys and can instantly transfer your coins both quickly and anonymously and you will never see them again.