With increased interest in cryptocurrency, 33 new cryptocurrencies are created every week. This number means approximately five new cryptocurrencies daily.
But if you don’t know anything about cryptocurrency, you may be scratching your head and wondering where to start. With all the technical jargon, crypto can seem overwhelming to get your head around. But you’re not alone.
If you’re new to crypto, this crypto 101 guide can help. We will break it down for you, so keep reading to learn more.
What Is Cryptocurrency?
Cryptocurrency, as its name suggests, is a currency. However, unlike traditional money, cryptocurrency is digital.
Cryptocurrencies use a decentralized system, or blockchain technology, to record transactions and allocate new units. The fact that they use this blockchain means there is no regulatory or central issuing authority.
Cryptocurrency doesn’t depend on traditional financial institutions to verify transactions. Instead, crypto exists solely in the digital world and works on a peer-to-peer system. This system means anyone with a crypto wallet can send and receive payments from anywhere.
The cryptocurrency uses encryption to verify purchases and transactions. This encryption increases safety and security when storing or moving crypto.
Different Types of Cryptocurrency
More than 20,000 cryptocurrencies are currently in use. Some are more well-known than others, like Bitcoin, even if you’ve never invested in crypto. A few more notable cryptos are:
Bitcoin is looked at as the original cryptocurrency and was launched in 2009. It’s said to be created by a person or a group of individuals named “Satoshi Nakamoto.” Mysteriously, no one knows who this person or people are.
The next well-known crypto is Dogecoin which uses a Shiba Inu’s face as its mascot. Just like Bitcoin, Dogecoin uses blockchain technology. You can read more about Dogecoin vs Bitcoin here if you would like.
Another well-known crypto is Ethereum (ETH), which runs differently from Bitcoin. Known as a “utility” cryptocurrency, Ether is originally intended to pay for using the Ethereum platform.
How to Buy Cryptocurrency
There are three primary ways to buy crypto, and each type will influence what you’ll pay for the coin. These three are:
- Crypto Exchanges
- Payment Services
If you want to buy and sell cryptocurrency, you should use a traditional broker. You can choose from several exchanges if you decide to go the exchange route. Each crypto exchange works differently, so review the currencies they support and the fees they charge.
Next, you want to fund your account by buying crypto to store in your crypto wallet. Most platforms allow you to buy crypto using traditional money using credit or debit cards. However, purchasing crypto with credit cards is risky, and most platforms discourage it.
Crypto 101: Explained
Hopefully, reading this crypto 101 guide makes you more comfortable with cryptocurrency and encourages you to learn further. Cryptocurrency can seem overwhelming with jargon like “blockchain technology” and “decentralized system,” but it’s not too complicated to understand.
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