What You Need To Know About Cryptocurrency

Cryptocurrencies have become one of the most talked-about financial assets today, and it looks like everyone wants a piece of it.

You’re probably wondering what all the hype is about, and why there are so many people trooping in to deal with them today. Well, in this write-up, we have put together all of the basic information you need to know about cryptocurrencies before you make up your mind about getting involved or not.

First of all, what are cryptos?

A cryptocurrency (or "crypto" as it’s called informally) is a digital currency that may be used to buy goods and services, but it is secured through the use of an online ledger and strong cryptography. What this means is that if I wanted to pay you for a burger with a cryptocurrency, rather than the traditional naira or dollar, we wouldn’t need a bank or any middle man as a matter of fact to help us process that payment, and it’d still be a transparent transaction.

How Are They Made?

Cryptocurrencies are generally created using blockchain technology. The method transactions are recorded in "blocks'' and time-stamped is described by blockchain.

How Do They Work?

Cryptocurrencies are entirely digital, so there is no tangible coin or bill associated with the one you own. Owners instead store cryptocurrencies in digital wallets and trade them on an internet exchange. Your wallet could be stored online (some major exchanges, such as Coinbase, have in-app wallets) or offline on a physical device like a USB drive.

The name cryptocurrency comes from the fact that it uses encryption to verify transactions. This means that storing and sending Bitcoin data between wallets and to public ledgers requires complex coding. The goal of encryption is to ensure security and safety. It's a lengthy, complicated procedure, but the end result is a secure digital ledger of Bitcoin transactions that hackers can't alter.

How Do People Make Money With Cryptos?

Just like the regular currency market, people make money off speculative trading and investing. There have been astounding growth in demand for several crypto assets such as bitcoin, and just like every other asset, higher demand against supply makes them more expensive. However, cryptocurrencies generally have one bitter-sweet trait — volatility. Prices move really fast compared to most conventional assets. So if you’re thinking of owning cryptocurrencies, you have to be ready to deal with quick price movements.

Is It Safe To Invest In Cryptocurrencies?

The most hyped angle of cryptocurrencies has been trading and investments. Several investors have made fortunes from cryptocurrencies, all thanks to their highly volatile price movements.

On the other hand, there have been several cases of extreme losses trading these digital assets, as several people have bitten more than they could chew in this sector for several reasons ranging from greed to sheer ignorance.

It is important to understand that the value of cryptocurrencies today is still largely speculative and therefore requires cautious investment. Take your time to really understand them before making any big bets.