23 Apr 2020 · 4 min read

Beginners Guide To Cryptocurrency

Disclaimer: The text below is a sponsored article that was not written by Cryptonews.com journalists.

Stock Photo: deniskot / Keyboard with a golden cryptocurrency tab

Cryptocurrency 101

Cryptocurrency has been around since 2009 and has grown in popularity ever since. But if you’re a beginner in the crypto industry, you might have a few questions like:

  • What is cryptocurrency?
  • How do you purchase it?
  • What is it worth?
  • What does it do?
  • Is it worth investing in crypto?

We’re so glad you asked all these questions! We did some digging and found some really valuable information regarding cryptocurrency. Here’s what we found:

What Is Cryptocurrency?

Stock Photo: scyther5 / Golden Bitcoins sitting on top of a brown leather wallet on a laptop keyboard

Cryptocurrency is a form of virtual currency that can be traded or exchanged for other goods. There’s a wide variety of cryptocurrencies out there; in fact, over 3,000 types of crypto exist. Some are more serious like Bitcoin (the most popular) while others are jokes that ended up being successful cryptocurrencies, like the Dogecoin or the Coinye.

Cryptocurrency was built around very complex mathematics and computer engineering which is why it can often be complicated to understand. While the code to create cryptocurrency was actually developed back in the ’80s, it didn’t actually get put to use until much later.

How Do You Purchase Crypto?

Cryptocurrency uses a blockchain that records and stores all crypto transactions. The blockchain is run by crypto miners, people who create cryptocurrency through more complex equations and computer systems. Usually, a cryptocurrency transaction only takes a few minutes to be completed. These transactions are kept extremely secure through codes created by the user that are very difficult to hack.

Purchasing cryptocurrency is as easy as buying something off of Amazon. All you need to do is choose a service you’d like to use to purchase crypto (there’s quite a few out there) and from there you can use your debit card to purchase and exchange cryptocurrency. A few popular places you can create an account include Coinbase and GDAX (Global Digital Asset Exchange).

What Is Crypto Worth?

Stock Photo: parilovv / Golden Bitcoins in front of a value graph

Think of cryptocurrency being like the stock market: its value goes up and down, depending on the day. Checking on the value of certain cryptocurrencies is an important step to take before committing to purchasing it. You want to ensure the specific crypto you’re investing in is stable.

But how can you know if a certain cryptocurrency is stable or not? Let’s take a quick dive into a very simple economics principle to explain that. When demand for something is higher, the price will be higher, but if the demand is lower, the price will be lower. So the more crypto that has been issued, the higher the price. And unlike normal currency (also known as fiat currency) which has an unlimited supply, cryptocurrency caps out at a certain point.

One other reason crypto worth can change is based on how useful it is. If one cryptocurrency is more accepted than others, then it’s value will increase significantly.

What Do You Do with Crypto?

When you go online shopping, you often see an option to pay with a credit card or PayPal. Now, some online retailers offer the option to pay with cryptocurrency. So if you’ve bought crypto and you’re wanting to do some shopping, that’s a great way to spend it. Most sites will have an icon of a cryptocurrency when you enter the shopping cart feature, which will indicate if they accept it or not.

One of the most popular things people use cryptocurrency for is to build up an investment portfolio for themselves. Like we said before, the value of crypto can increase and decrease. By investing crypto, you have the potential to grow that investment even more and receive great gains from doing so.

Is It Worth Investing?

Stock Photo: ismagilov / Graphic of a world map being connected through Bitcoin

Cryptocurrency is becoming more widely used from country to country. It may not be a bad idea to start investing in it. Others have done it before and seen a positive outcome. The more you invest, the more likely the value of the currency will increase.

Do keep in mind that cryptocurrency is liable to be taxed in certain circumstances. For example, if you received any gains on your crypto, you’ll be taxed on that. To find out just how much you’ll be taxed, you’ll want to use a service such as TaxBit that helps you calculate that figure to ensure you’re getting the best return possible and avoiding a potential audit from the IRS.

Overall, cryptocurrency is a fun world to get into and it’s definitely worth a try!