what is a cryptocurrency and how to buy it?

What is cryptocurrency? 

Cryptocurrency is a digital asset created using computer networking software that facilitates ownership and secure trading. A technology named Blockchain supports bitcoin and most other cryptocurrencies, it also keeps track of who owns what, and it maintains a tamper-resistant record of transactions. Public blockchains are usually operated without a central authority (a bank or government), i.e., decentralized. 

Individual units of crypto are referred to as tokens or coins, depending on their use. They can be used as units of exchange for goods and services, as stores of value, and some are simply designed to help run computer networks that can carry out more complex financial transactions. 

The easiest way to get cryptocurrency for most people is to buy it from another user or an exchange. 

How to buy cryptocurrency? 

These steps can help you understand the process better: – 

1. Decide where to buy it?  – The most accessible way to buy it for beginners is a centralized exchange, which acts as third-party overseeing transactions so that customers get what they are paying for. They typically sell at market rates and charge fees for various aspects of their services.  

If you are better accustomed to traditional brokerage, then there are a few online brokers such as Webull, Robinhood, SoFi Active investing, and TradeStation. For more experienced users, there is an option of decentralized exchanges that charge much lower fees than centralized exchanges but are more challenging to use technically. 

1. Choose how you’ll pay? –  The most popular crypto’s are available for purchase in fiat currencies, such as the U.S. dollar. You will likely use regular money to buy crypto if you’re a beginner. However, if you’re an experienced investor, you can trade your existing crypto for another type of crypto, for example, Bitcoin for Ethereum.  

1. Add value to your account? – You need to fund your account, depending on how you choose to pay, before purchasing any crypto. Most exchanges allow debit and bank transfers if you are using fiat currencies. 

You can also fund the purchase with a credit card if the exchange allows, but it can be a risky move as in crypto, if your investments decline in value, the interest costs can deepen your losses. However, if you already own cryptocurrency, you can transfer it into your account using any platform or a digital wallet. It is also necessary to verify that your crypto exchange allows trading between assets you are considering. 

1. Select a Cryptocurrency? – Before you narrow down one for investing, ask yourself what your goals for this investment are? Are you expecting it will increase in value?  

Some Cryptocurrencies that are widely circulated: – 

• Bitcoin – the first and most valuable cryptocurrency. 
• Cardano – competitor to Ethereum and led by one of its cofounders. 
• Ethereum – used to carry out more complex financial transactions than those carried out by Bitcoin. 
• Dogecoin – one of the most valuable cryptocurrencies. 

• Solana – emphasizes speed and cost-effectiveness, another competitor to Ethereum. 
• Stablecoins – values of this cryptocurrency class are designed to stay stable relative to real-world assets, like the dollar. 

 Best Crypto by Market Capitalization 

The ten largest trading cryptocurrencies by market capitalization as tracked by CoinMarketCap are:-  

Edited By : Amisha Rampal

Published By : K. Bindhiya Prarthana