Crypto is many things — a currency, an investment, a way to buy video games and more. It’s also a confusing and sometimes unfathomable topic that can leave people wondering, “Why is everyone so obsessed with this?”
Getting up to speed on crypto can seem daunting. Here’s a look at some key points to know before jumping in.
Cryptos are digital currencies that use encryption to secure transactions. They’re not backed by a government or regulated like traditional money, but are instead created and traded online. The value of a crypto depends on how useful people believe it will be in the future, how much other people want to own it and other factors. It can also be influenced by the news, how companies plan to use it and how governments decide to regulate or ban it.
The first crypto was Bitcoin, which launched in 2009. Since then, dozens of other cryptocurrencies have been created. Each has its own unique features, but all are based on blockchain technology.
A blockchain is a massive database that records all of the crypto transactions ever made. The computers that run the blockchain use a complicated algorithm to agree on what’s in the database without the need for a central authority. This makes it almost impossible to hack or change the records, proponents say.
One of the main reasons for the popularity of crypto is that it allows people to transfer funds quickly and cheaply. Another reason is that it’s often harder to trace than traditional money. This can help people who live in countries with restrictive financial systems or where it’s difficult to get a bank account. It can also help people who are hiding assets or evading taxes.
Many of the people who invest in cryptocurrencies do so as speculators, buying and selling coins to make a profit. This drives the price up and down, which can make it a risky investment. It’s generally recommended that high-risk investments make up only a small portion of your portfolio.
However, some people are using cryptocurrencies to store and protect their wealth. Some people even use them to buy goods and services, such as coffee, furniture and luxury items like cars and homes. The list of retailers that accept cryptocurrency continues to grow.
As with any investment, it’s important to do your research before investing in crypto. Read up on the currencies you’re considering and talk to other people who have invested in them. And remember that any type of investment can lose its value, so be careful and don’t put too much of your savings into it. It’s also a good idea to diversify your crypto holdings. This way, if you lose some of your money, you may be able to recoup it by gaining in other areas. You could also consider investing in less volatile investments like stocks and bonds.
