A Beginner’s Guide to Investing in Cryptocurrency


Cryptocurrency is a new way of making money that has gained popularity in recent years. It is an online form of currency that doesn’t need to be backed by a traditional bank or financial institution and can be transferred anywhere. It’s also an excellent way to avoid the fees associated with using conventional forms of payment, such as credit cards or bank transfers.

The Blockchain Technology Behind Cryptocurrency

There are thousands of different kinds of cryptocurrency. They all work differently and have different functions. But, they all serve one important purpose: to store and transfer digital information in a secure and decentralized manner.

The technology behind cryptocurrencies involves a complex system of code that is distributed over thousands of computers. This coding process is called the “blockchain.” When you make a transaction with crypto, all of the computers that are connected to the network will keep track of the change and verify it as valid. This prevents hackers from tampering with the coin’s value or identity.

Proponents say crypto is a democratizing force, empowering ordinary people to hold their own currencies and control their own money without the need for governments or central banks. However, critics warn that this technology is wildly unregulated and enables crime and other nefarious activities. Moreover, the vast amounts of electricity used to mine crypto are harmful to the environment.

Buying and Selling Cryptocurrency

You can buy crypto on exchanges or directly from a broker. The most popular exchanges include Coinbase, Kraken and Binance. In addition, many traditional brokers now allow you to trade Bitcoin in addition to other types of financial assets.

Investing in Cryptocurrency

If you’re interested in investing in crypto, consider exchange-traded funds (ETFs). These ETFs typically include shares of companies that use blockchain technology to create innovative products and services. Often these ETFs outperform the overall market.

While ETFs are a convenient way to invest in crypto, you should do your research on the ETFs you’re considering before you commit. You’ll want to understand what a company does and why they’re good at it.

Scams & Pump-and-Dump Schemes

Scams and pump-and-dump schemes are common in the world of cryptocurrency. Scammers often lure unsuspecting consumers into making investments by promising them quick profits. These schemes are illegal, and if you’re caught, you could be subject to an IRS audit or criminal investigation.

Crypto is a Risky Investment

The value of crypto can go down as quickly as it goes up, and you may lose your entire investment. That’s why it’s crucial to read independent articles and thoroughly understand each cryptocurrency before you invest in it.

You should also be careful about any ICOs, or initial coin offerings. These are often marketed as being the next big thing, but they’re often nothing more than scams. If you think you’ve found a scam, be sure to contact national reporting centers like Action Fraud or the FTC right away.

Despite all the hype surrounding cryptocurrency, it is still unclear whether it will replace the traditional banking system and national currencies. While it does provide a means to invest in a variety of different assets, it cannot meet the demands of everyday consumers, such as being able to secure mortgages or car loans.