Are you looking for a way to get into the world of bitcoin and other cryptocurrencies? This article is for you. In this article, you will find an outline what cryptocurrencies are and how they can be used.
Why should you invest in cryptocurrency?
Investing in cryptocurrencies, such as Bitcoin or Litecoin, offers unique opportunities that financial markets cannot offer. Cryptocurrencies allow a decentralized system of payment and money storage.
The whole system operates using a distributed ledger which records transactions on every computer participating in the blockchain network. Because of its independence from any centralized institution, it allows for fast peer-to-peer transactions without being subjected to third party fees or government control.
While you shouldn’t expect big gains from your initial investment right away, you will find out in crypto news that investing in cryptocurrency is an exciting opportunity that can potentially yield great rewards in the future.
Cryptocurrencies are divided into three different groups:
● Currencies – This group includes cryptocurrencies like Bitcoin, Litecoin, Dogecoin and Peercoin. These work similarly to fiat currencies (US dollar, Euro) but without the regulating institution. As such, there is no central authority or government involvement in their operations.
● Commodities – Cryptocurrencies like Namecoin and Darkcoin fall under this category. These do not work like normal currencies since they are intended mostly for business purposes rather than regular transactions.
● Misc – This group includes cryptocurrencies like Ethereum and Peercoin, which don’t fall under the first two categories because they do not work as currencies or commodities.
How do you buy cryptocurrency?
There are several ways of buying bitcoins and other cryptocurrencies:
- Web wallets – these are websites that act as virtual wallets where you can store your Bitcoins. These sites offer increased security but they may also have restrictions on advanced features such as trading options, where your bitcoins are stored, transaction details, etc.
- Software wallets – these are applications that allow you to send/receive cryptocurrency on your desktop or smartphone. It is important to note that hardware wallets fall under this category as well since they can be plugged into a PC.
- Paper wallets – these are Bitcoin “private keys” printed out on a piece of paper. These work like physical receipts with QR codes printed on them which you can use to spend currencies stored in your virtual wallet.
- Local wallets – these operate similarly to software wallets but store keys on a local PC instead of a virtual server. This means that the software will only work when your computer is turned on and running the program.
- Cloud wallets – this option offers increased security at the cost of convenience. These allow you to store crypto keys online away from your PC so you can access them from anywhere using an internet connection.