What is cryptocurrency? Cryptocurrency, also referred to as crypto, is digital money that allows you to purchase goods and services, or even trade them for profit. Stored in a digital wallet, either online, on a computer, or other hardware, cryptocurrency offers users the ability to do quick payments and allows them to avoid transaction fees.
Understanding the world of digital payment can at times be overwhelming, especially when cryptocurrency terms or acronyms are used to explain the process. Thankfully, there are cheat sheets available to help decipher the language used to explain cryptocurrency terms and everything around it.
Although the concept of cryptocurrency can be an exciting investment opportunity, there is also the risk that a new investor can fall for it if not prepared. As such, it is important to not only know what you may invest in but also understand how to try and avoid losing big. If you are new to the world of digital money and are considering investing in cryptocurrency, here are a few things to keep in mind before leaping into the realm of digital currencies.
The Different Forms of Crypto
With new cryptocurrencies continuing to be created, the two most-known forms are Bitcoin and Ethereum. In a nutshell, Bitcoin is a computer file that is saved in a digital wallet app either on a computer or a smartphone. Bitcoins can be transferred by others to your digital wallet, and you can also send them to other people.
Ethereum is open to all, allowing users access to digital money and data services. Users are provided with cryptocurrency tokens that are referred to as Ether (ETH). Similar to Bitcoin, ETH can be used to purchase and sell goods and services. One of the primary differences between the two is that users of ETH can build applications that run on the blockchain, in a similar way to which software runs on a computer. There are many places in which you can buy ETH and numerous sites that show you which payment methods are available to choose from.
The Key Is In The Timing
One thing to keep in mind when investing in cryptocurrency is that timing is everything. Digital assets are notorious for being extremely volatile. Cryptocurrencies such as the main two, Bitcoin and Ethereum can fluctuate in worth wildly and with little notice. A common approach that many cryptocurrency investors take is to “buy the dip” (buying when the price goes down), which means that they will purchase more coins that are not Bitcoin (otherwise known as altcoin).
You may find online that there is significant hype around an investment strategy, one which promises great returns from obscure crypto assets. Additionally, others might make exaggerated claims regarding how the price of Bitcoin will rise. Unfortunately, in the world of digital payments, there are sadly a few crypto scammers. To avoid falling for these tricks, it is important to keep an eye on the signs of a crypto scam.
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