Almost everyone has heard about cryptocurrencies and some have left 9 – 5 jobs to focus on trading them. Some have become millionaires off crypto while many more haven’t. these are quick facts to know about Crypto.
What is Cryptocurrency?
Cryptocurrency is essentially digital money traded from one person to another through the use of pseudonyms. There are no intermediaries like banks, no governmental oversight or authority, and no fees. The ‘crypto’ in cryptocurrency refers to the use of cryptography to ensure the security and privacy of every transaction.
New coins are created through a technique called mining. The process requires powerful computers that solve complex math problems. Each problem should take about 10 minutes to solve, and results in the creation of a predetermined number of coins. The total number of coins that can be created is fixed — there’s a limit of 21 million bitcoins that can be created. The number of coins rewarded for solving each problem dwindles as time goes on.
Bitcoin is believed to have been created in 2009 by Satoshi Nakamoto and was the first and most famous digital currency, but you can choose from more than 1,500, including ether, litecoin and even cryptokitties now.
They started out being only accessible in the deep dark web and used for questionable things but now, Crypto sue has made its way into
the mainstream, accepted by some major brands like Microsoft, Expedia etc as values of exchange even.
One major misconception about bitcoins is that you need a lot of money to invest. They are like stocks and can be bought in fractional amounts, at any convenient cost for the investor.
How does all of this work?
One word, Blockchain.
Blockchain is the underlying technology that makes the whole thing work. It is kind of a public, digital ledger of transactions. It records all transactions and ties them to their source and destination, thus allowing ease of trading in Bitcoins Pseudonymous clime.
How do I begin trading?
You’ll need two things to start trading crypto: An exchange and a wallet.
An exchange is what you need to convert your local currency, say Naira into Crypto. A wallet is where you store your crypto and it’s what allows you to send and receive crypto.
There are two main types of wallets: software and hardware. Software wallets run on an app or device and are useful if you want to actively trade. Hardware wallets are physical storage devices designed for holding crypto over the long term. It’s a bit like a vault. Hardware wallets are highly secure but unfit for quick transactions which may take several hours or even days.
Many different companies provide wallets and exchanges. ‘We think it’s the best way to offer a new person in the ecosystem an easy entry point,’ said Dan Romero, the GM of Coinbase Consumers. But before you consider making a major investment, you should test the waters first. ‘You shouldn’t put your life savings in it,’ Romero warns.
Trades are made using public and private keys. A public key is like an email address and a private key is like the password for that email account. If you have someone’s address, you can send them an email, but you can’t access their emails unless you also have their password.
And that’s how crypto works.
Bear in mind that……
It’s an unregulated platform. This means investments aren’t protected but it is also what gives it the privacy for which investors love it. In its Midterm report, Goldman Sachs said cryptocurrency is ‘neither a medium of exchange, nor a unit of measurement, nor a store of value.’
You also have to be extra sure you are sending to the right person or institution because you cannot reverse transactions once made.
It is crucial to seriously consider If it’s a financial path you want to take.
Excited trading if you do.