Home Cryptocurrency A Beginner’s Guide to Cryptocurrency 

A Beginner’s Guide to Cryptocurrency 

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Introduction to Cryptocurrency

The internet flooded with news of price hike in the value of Bitcoin last week. News outlets reported a record increase in the value of Bitcoin, the largest cryptocurrency. 

A lot of excited users on social media reacted to the recent events. This has stirred new debate about the future and status of cryptocurrency. 

There are those who have already invested and reaped the rewards. Some have heard of it but steer clear of it because they have doubts. Cryptocurrencies are here to stay. Therefore, it is essential to know what cryptocurrency is and how it works. It will prove beneficial in the long run. 

What is Cryptocurrency?

Cryptocurrencies are digital currencies. They do not exist like notes or bills. All the transactions and retails related to cryptocurrencies occur online. 

Bitcoin, the first digital money, was introduced by a mysterious person or persons Satoshi Nakamoto. It is a pseudonym. They described it as an online transaction system based on cryptographic proof or electronic codes

Cryptocurrencies are virtual money that is secured by cryptography or electronic codes. They are based on blockchain technology. Bitcoin and Ethereum are the most popular digital currencies. However, there are more than two thousand different cryptocurrencies, according to Reuters Graphics. 

Cryptocurrency performs all the tasks of physical money. You can buy goods or products and avail yourself services online. 

However, many people invest in cryptocurrency. The value of a digital currency varies. It can go up and down like stocks or gold. This is how people earn passive income by cryptocurrency. They sell it with profit after the prices soar. 

How Cryptocurrencies Work?

Cryptocurrencies are digital currencies that are encrypted (coded) and decentralized

Decentralization is simultaneously the most significant advantage and a drawback too. 

A central authority or bank regulates physical or real money. It regulates the inflow, printing, value, and distribution of money. 

Cryptocurrencies, however, are decentralized. A central authority does not control them. All the users or stakeholders play a role in deciding the value of a digital coin. Many other factors like the cost of production or minting also have a say in the value of a crypto coin. 

The transactions through cryptocurrency are recorded in blockchain technology. 

What is a Blockchain Technology? 

Blockchain technology is an open coding system that is very secure and efficient. 

As the name describes, every transaction is saved in the form of code or block. These blocks are attached to a broader, more comprehensive chain of all previous transactions of the particular currency. Thus the name blockchain. 

As soon as a transaction occurs, the whole chain is updated on supercomputers. It validates the transaction. 

The advantage of blockchain technology is its security. It is impossible to breach security with such an extensive and secure transaction system. Furthermore, there are many copies of a blockchain that any user can download because it is decentralized. Therefore, it is impossible to hack or tinker with the whole code

Market Capitalization 

The concept of market capitalization is essential if you are beginning or investing in cryptocurrency. It lets you decide which coins to buy and why. 

Market capitalization refers to the total or aggregate value of a cryptocurrency in the market. It is the full market share of a currency. 

Let us explain it in simple terms first. Just as all the stocks or shares combined give the total value of a company or enterprise, the market capitalization of a currency refers to the total worth of a currency

Mathematically, when multiplied by the value of one share, the total number of shares gives the total market capitalization of a business entity. 

Similarly, the total number of crypto coins multiplied by the value of one crypto coin gives the market capitalization of one cryptocurrency

Why is it Important to Understand Market Capitalization?

Understanding market capitalization is very vital. It helps you decide which digital currency to buy and which to steer clear of. 

A currency with better market capitalization is popular, credible, and easy to use. 

A better market capitalization also means that the currency is used often by other users as well. Therefore, it makes it easy to do online transactions. 

Market Volatility 

Market capitalization also decides the volatility of a digital currency.

Market volatility means that how aggressively the price of a utility, share, or asset fluctuates. 

The more the price fluctuates in specific durations, the more volatile the asset is. Similarly, the less the price fluctuates with time, the more stable or less volatile the currency is. 

Market Capitalization plays a massive role in the volatility of a currency in the market. 

The bigger the market capitalization of a currency, the less volatile it is. Similarly, the smaller the value of market capitalization for a currency, the more volatile it is. 

It is so because a lot of transaction happens in the currency with a higher market capitalization. It is very popular, and vast sums of investment go into a currency with higher market capitalization. 

You might wonder who takes the risk if the value of a cryptocurrency is so volatile. 

Suppose you look at it the other way around. In that case, volatility is the strength, and it is why people invest considerable sums in crypto coins. The volatility ensures that prices fluctuate. This way, sellers can earn profit from their sales. 

It also makes sure that there is a monopoly over the currency and it is distributed comprehensively. 

The volatility also indicates the decentralized nature of crypto coins. A central authority will regulate the value of money. In economics, the stability of a physical or real currency is very vital for growth. It is not the case with cryptocurrency. The prices fluctuate aggressively. The currency with minor market capitalization can also cash. 

Therefore, investing in coins with higher market capitalization value or market share is advisable. It will pay off big time.

What is Return on BTC or ETH? 

BTC refers to Bitcoin, and ETH means Ethereum. These are the two most popular, expensive, and widely used cryptocurrencies. They have the highest market capitalization. 

Return on Bitcoin or Ethereum refers to the profit one gain on the actual price of the purchase. 

It is similar to return on investment in stocks or shares. 

You can mathematically calculate returns. 

To calculate the return on cryptocurrency, you need to demarcate the current price and purchase price. 

For calculating the return, all you have to is subtract the purchase price from the currency’s current price and divide it by the purchase price. The answer is expressed in percentage. The value for return can be negative if the current price is less than the price at the time of purchase. 

It is an economic term. You can get the idea by calculating the profit only. You can simply calculate the profit by subtracting the price of the purchase from the current price. 

A negative value will reflect loss, and a positive will reflect the profit. 

YearBTC Return % ETH Return %
20171318%9159.4%
2018-72%-82.7%
201987.2&-8.0%
2020302.8%464.1%

How Can You Start?

Wondering how to start investing in digital currencies? This article is a good starting point. We have discussed some key concepts earlier. These concepts are central and vital to understand the world of cryptocurrencies. 

Fortunately, there are numerous helpful and useful resources online. The internet has made the world a better place. 

You can read numerous more articles like this one. There are YouTube tutorials from different experts, gurus, and mentors that guide and help a lot. 

Once you have grasped the key concepts, you are ready to buy and invest. You have to keep a vigilant and open eye on the market. You do not want to invest in a weak currency and incur losses on your lifetime’s saving. 

The key to excelling in the cryptocurrency market is to invest a little in the beginning. Once you understand the working of the market, you can easily navigate the complexities and technicalities of the market. Only the initial step is the hardest. You have to research and leave some to faith. 

After a few months, you will become a seasoned expert in the crypto world. 

Top 6 Platforms to Start 

There are numerous platforms and exchanges that you can use to buy, sell, invest and hold your cryptocurrency. You can also buy from peer-to-peer networks. 

Keep in mind that these platforms are not free lunches. They take a cut or commission by charging fees on each transaction. 

However, there are many competitors in the market to always move to the next one with the best offer. 

Some platforms charge a percentage of the transaction. At the same time, others charge fixed amounts on specific limits. You can decide what is better for you after thorough study and calculations. 

Binance (Best for Crypto trading)

Binance is one of the most popular platforms for crypto trading. Millions of transactions occur daily on this platform. 

It offers trading in a variety of coins. They offer transactions in more than One Hundred digital currencies. It is the reason for the popularity. It is diverse and effective. 

They have reasonable prices. They charge 0.1 percent on each trade. 

Every platform charges transaction fees, so do not worry. They offer a fifty percent discount if you transact through their own cryptocurrency called the BNB. 

you get a 5% bonus on the trading fees that your paid.

https://www.binance.com/en/register?ref=ZUPMOSGU

crypto.com (Best for rebate in Crypto)

The Crypto.com Visa Card has added additional rewards that are designed to fit the needs of consumers who are always on the move. Building on the existing travel rewards of the Crypto.com Visa Card, which include free and unlimited LoungeKey™ Airport Lounge Access, interbank exchange rates, and no overseas fees, select cards will have:

  • Your Travel – In Style: 10% purchase rebate on each Expedia or Airbnb booking 
  • Your Music:  Spotify. Get 100% rebate for your standard subscription plan 
  • Your Movies: Netflix. Get 100% rebate for your standard subscription plan
  • Best Spending Rewards. Ever. Up to 8% back on spending, local or overseas, no minimum or maximum spending required. Even the Midnight Blue Card now earns 1% back – a long standing request from our community.

Requirement for Crypto.com Visa Card

CRO Staking Requirements for the Crypto.com Visa Card will be expressed in local fiat currencies instead of fixed amounts of CRO. Please find the new CRO-equivalent fiat rates in the table below.

Register Crypto.com and get $25 USD 

https://crypto.com/app/5ymx5xjvsz​

Celsius Wallet (Best For Passive Income)

Celsius is one of highest earning wallet, which up to 17.78% Apy, a USD a $1000 you can Potentially earn $170 a year. Don’t forget you have pay transactions fees.

You begin to earn rewards as soon as any funds are credited to your Celsius wallet. You can follow our guide on how to set up your Celsius wallet here.

Rewards are calculated every Friday and distributed every Monday. That means that if you transfer funds to your Celsius wallet in the middle of the week, you will still earn prorated rewards on those assets through the accrual period on Friday. However, if you transfer your coins on Friday, Saturday or Sunday, then in that case your first reward payment will be the following Monday.

Register Celsius get $50 in FREE BTC:

* https://celsiusnetwork.app.link/1713773554 or use code 1713773554 in the app.

Coinbase (Most reliable exchange)

Coinbase is the oldest, most reliable exchange used for digital currency transactions. It is the most secure and conventional. 

It is used in over a hundred countries and almost all states of the United States of America. 

There have been instances of fake coins on other platforms. However, Coinbase has stayed clear of the muddy water. They are the oldest player in the game, and they know the rules. They have not yet indulged in any controversy. They have all the required licenses. 

They also have an active user support mechanism. Your complaints and reservations do not fall on deaf ears here. 

It also offers free bucks if you sign up. You get Five Dollars in Bitcoins to start off. 

The downside to this platform is the high transaction fees. Since it is used chiefly for Bitcoin, the transaction fees stand tall at five percent

However, there is a free version that charges a significantly lower fee. It is designed for veterans and seasoned experts of the market. 

BitFinex (For Experience Trader)

BitFinex is also an adequate exchange for trading crypto coins. It has unique and valuable features. 

You can avail yourself of the professional and commercial account that is useful for more significant transactions. 

They have a good community that is very helpful. They provide guidance and connectivity while you trade the risky path. 

They also have advanced graph features that help you guess or speculate the values and prices of crypto coins. It offers a sneak peek into the market. 

They have placed an effective reporting mechanism. So if anything goes wrong, customer support is there to help you out. 

The BitFinex terminal is beneficial. They use algorithms and previous transactions to help you form an informed opinion before a transaction. It enhances your market research and improves your productivity. 

They charge 0.1 percent on each transaction. 

Etoro (For Crypto & stocks)

It is the most popular platform for crypto coin exchange. According to official figures, they have Eighteen Million users in over One Hundred and Forty countries. Millions of transactions have occurred through Etoro. It is the most popular and the most secure platform to trade crypto coins. 

It is especially useful for beginners as it is easy to use

You can trade up to fourteen of the cryptocurrencies on this platform. 

It offers a demo account to help you understand the complexities and technicalities of the market. 

You can download the application or use the website version or domain. 

It only charges fees when you a coin. For Bitcoin, the rate of commission is 0.75 percent. 

How to Register 

The registration process is a little complex. Complex in terms that there are a lot of steps involved. Hopefully, you do not have to leave the comfort of your couch for this. 

The steps are varied and different, but the principles are shared. 

You need an email id or mobile number to make an account. You are required to verify the account through a mobile or phone number. 

You will also need an identity document like your identity or national card, passport, or driver’s license in some cases. Only one is required. An identity card is better. 

4 Ways Make Money from Platforms 

There are a number of ways you can make money from cryptocurrencies. You can earn money on the exchange platforms and also outside of it. 

#1 Holding 

Holding refers to owning or possessing an asset. 

Holding cryptocurrency means owning or possessing some value of cryptocurrencies. 

You can also buy or hold stakes in companies that have crypto assets like Tesla or IBM. 

Holding shares in such companies will shield them from market volatility. You will not worry about the fluctuation of price. 

Holding shares or stocks in such companies is also a good investment. You can earn profits by selling them. 

#2 Staking 

Staking, like the word suggests, refers to locking or holding crypto coins in return for rewards. 

For a blockchain to validate new transactions, it requires proof of work of proof of stake. 

Proof of work is when miners or coin producers solve a mathematical puzzle to validate the blockchain and add the new transaction. In return, the successful miner gains reward in the form of new coins. 

The delay or lag in the transaction is often due to this validation. 

Proof of work is energy-consuming, intensive, and hard to solve. It requires supercomputers. 

A more simple mechanism is the proof of stake. It requires holding coins in a Trust Wallet.

When a new transaction occurs, one of the users who staked their coins is chosen to validate the new blockchain. The stake of coins acts as a collateral. 

The more coins you stake, the better are your chances to get selected to validate the new transaction. You get rewards in the form of coins for staking too. 

#3 Trading 

Trading is the traditional buying and selling of digital currencies. 

You can buy or sell crypto coins on any of the above exchange platforms. 

You can buy at lower prices and sell at higher prices. It will earn profits for you. 

#4 Investing 

Investing in cryptocurrencies is a good option. 

It is the same as investing in stocks or shares. 

All you have to do is buy some coins or a percent of it. Hold it for a longer term, and receive a return if the prices soar. 

You can also choose to sell and reinvest in better currencies. 

How to Reduce Risks

Here is a pro tip if you are just beginning. 

The market volatility and uncertainty make things hard to understand and can compel you to stay away. 

However, investing in diverse coins is advisable. 

The prices of each coin fluctuate independently. It does not depend on another coin. So if you hold different currencies, even if the price of one falls, the others can rise. It will cover your losses. 

The demo account on most platforms I also a good starting point. Learn everything that there is to cryptocurrencies from the demo account. It will make you a pro without you having to part ways with your money. 

Why You Should Start Today 

Cryptocurrency has the potential to become the monetary system of the future. Larger enterprises and money sharing platforms like PayPal have expressed openness to transactions in cryptocurrencies. These are certainly good signs for the future of the crypto coins market. 

Now is the best time to start investing or buying cryptocurrencies. Those that have invested time and money in it in the past are now reaping the rewards. They have received healthy returns on their investments in crypto coins. 

The world is fast engulfing itself in digital evolution. Every aspect of our life, from social to political, is digitalized. Technology has a huge role to play in the financial sector. Therefore it is better to start off now. 

Businesses are shifting their ships online.  It will not surprise many if the transactions for daily products and services move to digital currencies. It is a more natural and secure option for them. 

The recent pandemic has also highlighted the importance of digital platforms. While people were quarantined, the digital marketers and tech savvy people had the most benefits. 

The digital currency was also preferred due to social distancing. 

The best thing is that they are effortless to understand. All you need is some research or watch a few videos. It requires no investment in terms of time. 

Final Words 

Cryptocurrencies are the new norm. They are also the future of the monetary system. While some have expressed reservations, most people seem to welcome the advent of digital currencies. 

Cryptocurrencies are not very technical. They are easy to use. The exchange platforms make it all more easily. There are also some brilliant people online that guide and mentor you along the way. 

However, there is no denying that it has turned people into millionaires. The money is virtual, but the profits are real. 

Millions of people use digital currencies daily for everyday products and services. They have gained profits, set up a business, or advise others on technical terms. 

You should not miss out on this great opportunity. 

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