The complete beginner’s guide to cryptocurrency
Cryptocurrency is the new era of money and the next generation of undertaking transactions. For some who invested early, millionaires were made over an almost impossibly short period of time. Today, cryptocurrencies are revolutionising how we can buy and sell items – and the technology behind cryptocurrenciesis already transforming industries.
It’s impressive stuff – yet cryptocurrency is also intimidating for those just entering this realm. Here we provide a complete beginner’s guide to cryptocurrency – answering the key questions that you likely have, all in straightforward (and jargon free) English.
Understanding the future of money, by looking back at the past
Before the modern era, civilisation based financial transactions were based on commodities – they traded items such as livestock and precious metals in return for other goods. Then came the modern age – where banks and financial institutions were born – money began to be tracked, recorded and managed across massive regions and, eventually, around the world. This would lead to each government taking charge of printing and manufacturing money.
Fast forward to just fifteen years ago, and the internet allowed consumers around the world to trade anything they wished with bank technology (first, credit and debit cards); then came payment platforms (such as PayPal and Payoneer). Now, cryptocurrency technology (known as Blockchain technology) is already transforming many industries, including: insurance, music, cybersecurity, car leasing, networking, banking, alternative financial services and automotive.
The benefits of cryptocurrency
- Cryptocurrencies are free from laws, rules and regulations
This may sound like a negative aspect of cryptocurrencies, however this fact means that you’re free from bank charges, interest rates and other fees from financial transactions when trading this digital form of money.
- Cryptocurrencies offer complete anonymity
Cryptocurrencies provide a way in which to undertake transactions without divulging any personal information whatsoever. This compares to using a cash machine, or debit or credit card for online transactions – where the holding banks may use this personal data in order to record your purchases.
That said, whilst by and large cryptocurrency transactions are legitimate, there has of course been cause for concern as to what happens when unscrupulous people can move money without any tracing whatsoever.
Some cryptocurrencies are now considering, or have already, implemented KYC (‘Know Your Customer’) which removes this uncertainty. We speak of one such example, ‘One Coin’, a little later in this blog.
- Cryptocurrency puts you in complete control
Whether you have a bank account or alternative financial account (such as PayPal) you always face a possibility that the holding business could freeze your assets when they wished. Cryptocurrency by comparison is always owned and controlled by you. The only exception to this rule is where illegal activity can be proven to have happened. In this instance crypto assets can be frozen.
Key question: Why do different cryptocurrencies have different values?
The world of cryptocurrency is made up of around 20 different currencies, which makes this a world that’s about way more than Bitcoin. Understanding the differing values that these cryptocurrencies hold comes down to four core factors: Time, energy, resources and demand.
Whilst some drive value through innovation (such as the earliest innovator that is Bitcoin), other cryptocurrencies have achieved value growth through simply creating a huge supply.
Investing in cryptocurrency
Just like any other currency – there is money to be made with cryptocurrencies. As a core concept to this, it’s important to understand that where potential high returns are sought, high risks must be taken. This applies to any form of investment. Consumers are also able to invest in the underlying technology of cryptocurrencies (Blockchain).
Key question: Where can you buy and trade Cryptocurrency?
Cryptocurrencies can be purchased via many providers. However, before you take this step you need to bulk up on your crypto knowledge, and specifically your cryptocurrency investing knowledge.
The biggest challenge you may face is the process of purchasing cryptocurrency and securing a plan to store the crypto in your cryptocurrency wallet.
Online providers for purchasing cryptocurrency include: Coinbase, Kraken, Shapeshift and LocalBitcoins.
Cryptocurrencies can be traded via many online platforms, some of the main ones include: GDAX, OKCoin, Bitfinex, BTCC, CEX.IO and Gemini.
Notably there are many cryptocurrencies both in the pipeline of being created, as well as those that are established but yet to be launched on the official crypto markets one of which includes One Coin. In relation to the anonymity issue I discussed earlier in this blog, it is One Coin that already has ‘KYC’ this means that all transactions using the currency are tracked, and ID is required. I’ll be diving further into the details of One Coin in my upcoming blog articles.
Still got questions?
If you’ve still got questions about the world of cryptocurrencies then get in touch – I’d be happy to run you through any uncertainties you may have or clear up any confusion.
Next week, we’ll be diving into what the future holds for cryptocurrency, and what this, in turn, may mean for the world.