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What Is Cryptocurrency: A Beginner’s Guide
While Bitcoin, the brainchild of the elusive Satoshi Nakamoto and a small group of collaborators, is the grandfather of cryptocurrencies, there are a huge number now available. Cryptocurrencies are making some serious waves around the world and are growing steadily in popularity. What was once a novel idea has grown into a worldwide movement. While adopters of cryptocurrencies may have differing philosophical viewpoints, almost all of them are dedicated to spreading the good word and seeing more widespread adoption of blockchain technology its accompanying cryptocurrency coins.
There are many people around the world, however, who don’t know the first thing about cryptocurrencies. There is a lot to consider when talking about cryptocurrencies and blockchain technology and it can be a lot to process for people who don’t yet understand what they’re all about. We aim to make the concept of cryptocurrencies easy to digest and so have prepared a quick guide to help you make sense of all the ins and outs revolving around the controversial new tech.
Cryptocurrencies aren’t all made equal and some have different uses, based on the blockchain tech they use. For example, Monero is widely considered to be a privacy-centric coin. The key word here is fungible, which basically means that each coin is indistinguishable from any other, so your coins can’t be red-flagged even if they were previously used in a less-than-legal way. Dash, on the other hand, is intended to make crypto purchases faster and more secure. Their competition is stiff and includes Litecoin, with its team introducing their LitePay system soon, which is expected to make transactions even faster. Another cryptocurrency, Neo, is more focused on a community-based approach that facilitates the use of smart contracts. Their goal is to usher in that they call the ‘smart economy’.
What Can You Do With Cryptocurrency?
These days you can use cryptocurrencies to purchase just about any product you can buy with traditional, or fiat, currencies, especially if you live in a country that’s cryptocurrency-friendly. Bitcoin ATMs and cryptocurrency point of sale implementation have already taken off and this trend shows no signs of slowing down in the near future. In addition to brick and mortar businesses, there are also many online stores and marketplaces that accept cryptocurrencies as payment, with some exclusively using crypto for transactions. Many people nowadays also choose to trade or invest in cryptocurrencies, much like the way they do with regard to stocks, with those who know what they’re doing being able to earn ridiculous amounts of money, even if they don’t have much to invest right off the bat.
POS systems, as was mentioned earlier, have been implemented in many businesses around the world, with signs proudly proclaiming that one coin or another is accepted as payment. It’s worth keeping in mind, however, that not all cryptocurrencies grant you the ability to spend them at any given location. Still, it is possible to use over 135 different cryptocurrency coins at countless traditional businesses, which is a solid indicator that they’re starting to have a real impact on the world as we know it.
Many of these are expected to also have some form of utility that furthers what you’re able to do with them, at least with regard to the underlying blockchain technology. In many cases, the coins, or tokens, can be used for microtransactions and other services on their own, specific platforms in addition to being accepted as payment for goods and services. For example, the Dogecoin cryptocurrency was started as a joke based on a Reddit meme and is now used on the Reddit platform as a way to tip other users. This is partly why Doge is considered by some to be a good altcoin for newcomers looking to get their feet wet. At the moment, the most widely accepted cryptocurrencies are Bitcoin (of course), Ethereum, and Litecoin.
Investing in Cryptocurrencies
The cryptocurrency markets are becoming wildly popular as people begin to see just how much money can be made, with a bare minimum of effort. The potential to earn, however, isn’t always realized in practice, much like we have come to expect from the stock markets. Investing requires a certain level of understanding and intuition. The volatility of the cryptocurrency markets is another factor that is difficult to overlook and anyone hoping to invest should take note of the inherent risks before taking the plunge.
Cryptocurrency markets are currently relatively unregulated when compared to others that have been around long enough for that regulation to be implemented. Governments across the world are, at this time, doing what they can to navigate the muddy water of the cryptocurrency world in a bid to properly regulate them in the future and ensure that they are less apt to wild swings and market manipulation.
These things will come in time and regulation is already beginning to be implemented. This is helping to legitimize cryptocurrencies in the eyes of those who were initially concerned about whether or not they would actually take off. What this will lead to is unclear at the moment, but it is clear that cryptocurrency is probably here to stay. A slew of new investors began teaching themselves the ropes between 2017 and 2018 and more people are trading altcoins every, single day.
Legality of Cryptocurrencies
Cryptocurrencies currently reside in a bit of a gray area in the eyes of many governments around the world. Most of these governments are treading carefully and are careful not to promote the use of cryptocurrencies, with countries like India actively warning their citizens against using them in order to better protect their people from the risks that they pose. The decentralized and relatively private or anonymous nature of cryptocurrencies makes them wary right now – and for good reason.
For a long time after it first launched, Bitcoin was used almost exclusively by either those who believed wholeheartedly in the technology, which made up a small percentage of Bitcoin holders in the early days, or anyone hoping to stay under the radar when making questionable purchases. This idea that Bitcoin was overwhelmingly being used by criminals or terrorists, due to its inherent anonymity, has been hard to shake. It has persisted even as cryptocurrencies have grown into so much more than they once were. Crypto is now being adopted by a largely law-abiding group of supporters and they are slowly helping to distance these tokens from any negative connotations.
Even though cryptocurrency is legal in most of the world, with everyday businesses accepting them as legitimate payment, there are a few countries that refuse to go anywhere near it. They are illegal in Algeria, Bolivia, Ecuador, Kyrgyzstan, Bangladesh, Nepal, Cambodia, and Morocco. Others, such as Indonesia, haven’t banned them outright, but are taking a very tough stance and have refused to accept cryptocurrencies as legal tender. The EU and G7, to their credit, have allowed cryptocurrencies and are behind the push to properly regulate the markets in a bid to ensure they remain stable. Many such governments are also actively looking into using blockchain technology themselves, along with countless corporations. This suggests that, aside from a few holdouts, world governments are, at the very least, tolerant of cryptocurrencies.
How to Buy Cryptocurrencies Cryptocurrencies
Cryptocurrencies can be purchased on any number of online exchanges, such as Coinbase, that allow for easy trading, with many accepting debit card payments and wire transfers at the very least. These exchanges will also allow you to use a credit card, but some banks have put an end to that practice, citing the fact that they aren’t willing to actively bet on such a volatile market. Exchanges allow for the purchase of different coins, with some newer cryptocurrencies only available to purchase on a specific platform or exchange.
Anyone interesting in purchasing cryptocurrencies can use an exchange after signing up for an account and going through a KYC (Know Your Client) process. Once validated, users can purchase coins and the exchange will apply a small fee per transaction. These fees vary from platform to platform and many users will use a specific exchange to purchase their cryptocurrency before transferring it to another exchange or virtual ‘wallet’, based on whether they want to hold, trade, or use the coin to make real-world purchases.
There are also markets available that can sometimes fit into more of a legal gray area. These include person-to-person purchases of coins for cash, using platforms like LocalBitcoins or Paxful. Flexepin vouchers are also available, as are prepaid cards. Both of these can be purchased with cash at a gas station or convenience store that carries them. A money transfer service, such as Western Union, can also be used to purchase cryptocurrencies. Bitcoin ATMs, are your last realistic option, but they can have steep fees and should be avoided.
When purchasing cryptocurrency, you should always do what you can to ensure that everything is above board, as there are many scammers that will take your money and leave you with no coins, whatsoever. Your best bet is to use reputable online exchanges, as these have the best guarantee that you won’t be taken advantage of.
Future of Cryptocurrencies
The future of cryptocurrencies is very much up in the air at the moment, but all indications suggest that they are here to stay, in one way or another. Blockchain technology is poised to change the world in a fundamental way in the coming years and its accompanying coins or tokens are expected to follow suit. With so much volatility, it’s hard to predict which coins will eventually take off, but that’s all part of investing in new technologies.
Enough people around the globe believe in the benefits of cryptocurrencies that they will hold out against any opposition. The decentralized nature of these coins allow for simplified peer-to-peer transactions and storage of accumulated wealth without the need to rely on any third party. This has already led to widespread adoption by many people, with the greatest impact being seen in regard to those living in developing countries. This is because cryptocurrencies help them save money by avoiding bank fees and those from money transfer services, which can be quite steep. It is also a way to protect them against runaway inflation to a certain extent.
With all of these factors helping to promote cryptocurrencies, we expect them to only get more popular as time goes on. The cryptocurrency future will be an interesting place and many supporters believe that it will help humanity tear down our dated institutions, allowing individuals to take more control of not just their wealth, but also their personal information and data. The future really is looking up and cryptocurrency is helping to shape the world in ways that we couldn’t possibly have dreamed of even a decade ago.