Last Updated: June, 2020
Investing in Cryptocurrency
What is a cryptocurrency? A cryptocurrency is an electronic currency that you can buy, sell or store without a central bank.
As a decentralized currency, crypto’s use blockchain (online) ledgers to track and approve transactions. These ledgers are public and ensure transparent and efficient transactions.
On January 3, 2009, Bitcoin came into existence as the first cryptocurrency. The first notable transaction was the purchase of two pizzas in exchange for 10,000 Bitcoins (BTC).
In 2018, Bitcoin made the front page of every financial paper in the world when it peaked at $18,918 per coin. With investors jumping in, early investors enjoyed significant gains with the price spike.
With thousands of coins and exchanges, crypto has never been more accessible. The global crypto market is as volatile as ever and carries huge risks for investors.
Although Bitcoin is the most popular, there are other coins, otherwise called altcoins. There are over 6000 altcoins on the market, including Ethereum, and Litecoin.
Like the stock market, the crypto market utilizes exchanges to buy and sell coins. The most popular exchange is Coinbase. Coinbase has grown in popularity as users can buy popular coins with their credit cards.
Coinbase is an exception in the exchange space. Most exchanges use Bitcoin or other popular coins as the main currency to buy altcoins. Thus, on these other exchanges, new investors need to buy Bitcoin, for instance, to buy altcoins.
Although investing in crypto can seem complicated, there are some perks. Investors can transfer infinite sums of money with minimal fees in mere seconds. There is no closing bell, and you can buy a part of a coin, or thousands of coins with no limits.
For investors, the crypto market carries significant risk. For the main coins, you can see massive swings in a single day.
For the altcoins, it can be a struggle to find good ones. There are thousands of altcoins. Many coins go nowhere, and although on paper they may seem stable, in the trading market, they are volatile.
If you have the risk tolerance and interest in this evolving market, then do you due diligence first.