Beginner’s Guide to Cryptocurrency


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Beginner's Guide to Cryptocurrency 101
Stock Photo: deniskot / keyboard with a golden cryptocurrency card

Cryptocurrency 101

The cryptocurrency has been around since 2009 and has grown in popularity ever since. But if you are a beginner in the cryptocurrency industry, you may have some questions like:

  • What is cryptocurrency?
  • How do you buy it?
  • How much is it worth?
  • What does it do?
  • Is it worth investing in cryptocurrency?

We are so glad you asked all these questions! We dug a bit and found some really valuable information on cryptocurrency. Here’s what we found:

What is cryptocurrency?

Beginner's Guide to Cryptocurrency 102
Stock Photo: Golden scyther5 / Bitcoin sitting on top of a brown leather wallet on a laptop keyboard.

Cryptocurrency is a form of virtual currency that can be exchanged or exchanged for other assets. There is a wide variety of cryptocurrencies out there; in fact, there are over 3,000 types of encryption. Some are more serious like Bitcoin (the most popular) while others are jokes that ended up being successful cryptocurrencies, like Dogecoin or Coinye.

Cryptocurrency has been built around very complex mathematics and computer engineering, which is why it can often be complicated to understand. Although the code to create cryptocurrency was actually developed in the 1980s, it wasn’t actually used until much later.

How do you buy Crypto?

Cryptocurrency uses a blockchain that records and stores all crypto transactions. The blockchain is run by cryptocurrency miners, people who create cryptocurrency through more complex computer systems and equations. Usually, a cryptocurrency transaction takes only a few minutes to complete. These transactions are kept extremely secure through user-created codes which are very difficult to hack.

Buying cryptocurrency is as easy as buying something from Amazon. All you have to do is choose a service that you want to use to buy cryptocurrency (there are quite a few out there) and from there you can use your debit card to buy and trade cryptocurrency. Some popular places you can create an account include Coinbase and GDAX (Global Digital Asset Exchange).

What is encryption worth?

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Stock Photo: parilovv / Golden Bitcoin in front of a value graph

Think of cryptocurrency as the stock market – its value rises and falls, depending on the day. Checking the value of some cryptocurrencies is an important step to take before committing to buying it. You want to make sure that the specific crypto you are investing in is stable.

But how can you know if a certain cryptocurrency is stable or not? Let’s take a quick dive into a very simple economic principle to explain it. When the demand for something is higher, the price will be higher, but if the demand is lower, the price will be lower. So the more cryptocurrencies that are issued, the higher the price. And unlike regular currency (also known as fiat currency) which has an unlimited supply, cryptocurrency stops at some point.

Another reason why the value of cryptography can change is based on how useful it is. If one cryptocurrency is more accepted than others, its value will increase significantly.

What do you do with Crypto?

When you shop online, you often see an option to pay by credit card or PayPal. Now, some online retailers offer the option to pay with cryptocurrency. So, if you’ve bought cryptocurrencies and want to shop, it’s a great way to spend it. Most sites will have a cryptocurrency icon when you access the shopping cart feature, which will indicate whether they accept it or not.

One of the most popular things people use cryptocurrency for is building an investment portfolio for themselves. As we said before, the value of cryptography can go up and down. By investing in cryptocurrency, you have the potential to grow that investment even more and receive great returns from doing so.

Is it worth investing?

Beginner's Guide to Cryptocurrency 104
Stock Photo: ismagilov / Graphic of a world map connected via Bitcoin

Cryptocurrency is becoming more and more used from one country to another. It may not be a bad idea to start investing in it. Others have already done so and have seen a positive result. The more you invest, the more likely the currency is to rise in value.

Keep in mind that cryptocurrency can be taxed under certain circumstances. For example, if you have received earnings on your cryptography, you will be taxed on that. To find out how much you will be taxed, we recommend using a service like TaxBit which helps you calculate that amount to ensure you are getting the best possible return and avoid a potential IRS audit.

Overall, cryptocurrency is a fun world to enter and definitely worth a try!

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