Intro to Cryptocurrencies: What Are They and Can They Make You Money

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You probably know that a cryptocurrency is a digital or virtual currency. What this means is that they don’t exist in a physical form. The first cryptocurrency was created in 2009 and ever since they have been gaining more and more popularity. Today there are over 10.000 different cryptocurrencies, even though some of them aren’t really significant as they aren’t as valuable as others. 

Cryptocurrencies can be transferred to any person via the internet, without a bank or another financial organization in the middle. Many people invest in them, hoping for an increase in their value, trade with them, buy and sell them using other cryptocurrencies or fiat money, but they can be used for payments, as well. And with the opportunities, they offer for making a profit, like many you may be wondering how they work and how you can start investing.

How Can You Buy Cryptocurrencies?

The best way to buy cryptocurrency is through a crypto exchange. Exchanges are platforms where you can buy, sell and trade with cryptocurrencies, for a fee. The most important thing to consider when choosing which one to sign up on, is how they will protect your personal information, and your finds. 

Check their reputation, look for comments and reviews by other users. Exchanges make a profit through fees for any transaction. Before choosing one, learn what they will charge you for, and how much, so that you are sure that their fees won’t seriously affect your profit.

Cryptocurrencies can be bought with other cryptocurrencies (or in other words – trading with crypto), using your bank account, debit or credit card, a PayPal account, a Payoneer card, or other digital financial services. You can also generate new crypto coins, as some cryptocurrencies can be mined. This requires a certain type of software and hardware, depending on the cryptocurrency you want to mine.

Why Do Cryptocurrencies Have Value?

Many people thought that investing in cryptocurrency is crazy, as they aren’t money, they don’t exist. But the same can be argued for many things we consider valuable, including money. It’s simple, things have value because people decide that they do. The same is true for cryptocurrencies. 

Moreover, some of them have limited supplies. So, they gain value as the number of people who want to invest in them, or, in other words, as the demand gets higher. As the value grows, fewer people sell it, so the demand is even greater. And when something is rare, naturally, it’s more valuable.

However, it’s important to understand that the value of cryptocurrencies changes all the time, regardless of how they work. You can buy really expensive coins, that will lose in value in some period, you can buy them cheap and make a profit, or their value can decrease or increase insignificantly.  

So, if you are hoping for a guarantee that you would get rich overnight, there isn’t one. This doesn’t mean that you shouldn’t invest. Even when you are buying shoes you can’t be completely sure that they will perform as you have expected, or as they were promoted. So, like with any other investment, to minimize the risk and increase the chances for profit, you must learn how to do your research and hope for the best. 

And if you are just starting, you should take it slow. Make sure that if you lose the investment, it won’t have a huge impact on your finances and your life. In other words, only invest as much as you think you can afford to lose.

What to Consider When Buying Cryptocurrencies?

Since there are so many different cryptocurrencies and new ones appear all the time, and since all of them function differently, before anything you must choose which one you want to invest in. This takes time and a lot of research. Everyone has heard of Bitcoin, but aside from it, some of the most popular and most valuable cryptocurrencies, include Etherium, XPR, Tether, Dogecoin, BNB, etc. 

To choose, you should learn the characteristics that make the currency different, what type of technology they use, how they are produced, the creators’ philosophy and vision, the current and total supply, and so on. Do your research to make sure that you invest in a currency that maintains its value. To minimize the risk instead of speculative and short-term investments, think long-term, and research thoroughly.

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Conclusion

Hearing so many stories about people who became rich thanks to cryptocurrencies, it’s not surprising how many are thinking about starting to invest. However, buying cryptocurrencies always comes with the risk of losing your investment. This is why becoming a crypto trader isn’t a simple task. It takes a lot of learning, research, and decisions at each step of the process.

The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.