With more people joining the crypto craze, teaching yourself how to invest in cryptocurrency can be an investment in the future. Here’s how.
Cryptocurrency can be a difficult concept to understand. Is it something fluffy out on the internet or is it an actual currency? The difference between cash currency and cryptocurrency is how the latter uses virtual coins or tokens. And the idea of cryptocurrency is that you can trade with other people who own crypto without depending on a bank. Let’s look at how to use cryptocurrency.
Choosing a crypto exchange
Just like choosing a broker for stocks, you need to pick an exchange. A crypto exchange basically allows you to convert your flat currency into cryptocurrencies. To better illustrate, a crypto exchange is similar to a bank. There are several to choose from, but since Cryptomeister has reviews of the best cryptocurrency exchanges, it would be a good idea to check that out first. Some of the more famous ones are Binance, Kraken, and eToro.
Purchasing cryptocurrency
Even though cryptocurrencies are traded without a bank, you still need a debit card in order to make transactions, or you can link your bank account to your crypto account. You just have to make sure that you have enough funds in your account. After that, you are ready to purchase. There are several cryptocurrencies, but some of the more well-known are Bitcoin and Ethereum.
Storing your cryptocurrency
An important step is knowing how you store your cryptocurrency, as they’re not stored in a bank. There have been stories of people losing millions because they either forgot their password or got hacked. Cryptosecurity is super important, and that is why you need to choose a secure storage for your cryptocurrency.
Exchange
When buying cryptocurrency, it is usually possible to store it in a wallet that is attached to the exchange. It is convenient, fast, and cheap. The downside, however, is that it’s less secure than other options because hackers have easier access to the exchange.
You can also choose to store your currency in a hot wallet, which are wallets that are run on internet-connected devices, such as your computer or phone. These are convenient, but since they run on the internet, there is a risk of theft.
Cold wallets
The most secure way is to store your cryptocurrency in a cold wallet, which means it isn’t connected to the internet. Instead, they come in the form of external devices, a USB drive for example. Using a cold wallet does mean that you have to be very careful not to lose or break the device, as you might not be able to get your cryptocurrency back.
The advantages of cryptocurrency
There are several reasons why we see more countries joining in on using cryptocurrency. Banks tend to reduce the value of money via inflation. Because the Federal Reserve manages the national currency in the US, they have regulated interest rates as a result of inflation. But because cryptocurrency isn’t governed by any authority, cryptocurrency can circulate without being directly affected by the economy.
Besides that, there are other advantages of using cryptocurrencies:
● Faster transactions for international payments
● Reduces credit risk
● Transaction fees for payments can be lower
● They are secure and confidential
Also read:
- How to Minimize Risks When Investing in Crypto
- Can Crypto Fit into an ESG Portfolio?
- Will Crypto Bounce Back in 2023?
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