A lot of investors are investing in cryptocurrencies. But for the masses, they are still an enigma.
Cryptocurrencies have been around for some time now. Several companies have started accepting crypto as payment for their goods and services. Their vigorous growth and attractive returns have piqued the interest of many Indian investors to explore crypto as an investment option. But how to learn cryptocurrency trading? Well, the best place is the internet. But for a beginner, it is a difficult task. So we have compiled a cryptocurrency guide for beginners with cryptocurrency basics and trading methods.
What Is Cryptocurrency?
Let’s begin by understanding the meaning of cryptocurrency.
It is a digital token or virtual money secured by cryptography, used for paying for services and managed by an open-source Blockchain ledger technology. They are known for the decentralized format, making them immune from government intervention. Moreover, cryptography technology makes it impossible to counterfeit or double spend.
The first peer-to-peer, decentralized cryptocurrency was Bitcoin, which made its debut in 2009. Currently, there are around 10,000 cryptocurrencies available in the sphere. And, per the data published by CoinMarketCap.com in August 2021, their total value was $1.9 trillion. Many of them are popular and transacted daily.
Although several countries, including India, are yet to formulate regulatory status for dealing and investing in cryptocurrencies, they are quite popular among investors and a good option for portfolio diversification. A crypto trading for beginners guide is a good starting point if you want to add them to your investment mix.
Types of Cryptocurrency
There are Bitcoins and Altcoins. Bitcoin was the first cryptocurrency. Altcoins were launched after Bitcoin to improve on it. Several of the altcoins follow the price trajectory of Bitcoin, meaning their value follows the growth and fall of Bitcoin’s price in the exchange.
Based on data available on September 30, 2021 few of the popular cryptocurrencies are as follows.
The purpose of including a list of top cryptocurrencies in crypto trading for beginners is to let you understand scopes of investing beyond Bitcoin.
How Does Cryptocurrency Work?
Consider cryptocurrencies as the chips you get in arcades or at casinos. You buy them against money and also can encash them. Cryptocurrencies are digital tokens or virtual cash that work as the medium of payment for services bought on a computer network. The technology used for managing crypto transactions is Blockchain. It is a decentralized ledger system spread across many computers that records cryptocurrency information concerning each transaction occurring on each crypto coin. Cryptocurrency uses decentralized technology and cryptography that helps users transact securely through a network of computers.
Several of these currencies use mining, a process by which new cryptocurrencies enter into circulation. The process is painstaking and costly but also sporadically rewarding. It attracts many users who earn through crypto mining.
Mining allows miners to earn cryptocurrencies without investing money in them. They receive cryptocurrencies as rewards for completing blocks of verified transactions. It then adds to the Blockchain.
How do I buy cryptocurrency?
Many platforms are available in India where investors can buy cryptocurrencies from exchanges, like Coinbase and Coindesk. However, the best platform for buying Bitcoin is Zebpays. One can transfer money from their savings account to the Zebpay platform to buy Bitcoins. You will have to complete the usual KYC formalities to place a buy order. Once done, you can purchase cryptocurrencies, paying through digital payment methods. One can start investing in Bitcoin with just Rs 500 and increase their exposure as they gain confidence.
Traders trade crypto coins in the exchanges like stocks and realize a profit from changing prices. However, cryptocurrency prices are highly volatile, and investors must understand the inherent risk.
Besides direct investment, investors can also gain exposure to cryptocurrencies through cryptocurrency ETFs. ETFs, invest a corpus in a bucket of cryptocurrencies or derivatives with cryptocurrencies as underlying. Instead of a single currency, ETFs follow a bucket of currencies and offer double benefits.
Advantages and Disadvantages of Cryptocurrency
Cryptocurrency is a virtual currency you can use to buy things from companies that accept payment in crypto coins. But, they don’t come without pros and cons. The advantages and disadvantages of using cryptocurrencies are enumerated below.
Cryptocurrencies are gradually becoming mainstream. These are fast and low-cost. Besides, cryptocurrencies have become famous for investment. We hope you’ll find our cryptocurrency guide for beginners informative to learn cryptocurrency basics. But before you start investing in crypto, learn how to trade cryptocurrency and always make decisions based on complete information.
What Is Cryptocurrency in Simple Words?
How Does Cryptocurrency Make Money?
What Are the Most Popular Cryptocurrencies?
How can I use cryptocurrency?
How can I acquire cryptocurrency?
How do I store my cryptocurrencies?
What is the difference between U.S. Dollar and Cryptocurrency?
- The Federal Reserve issues the U.S. Dollars. But new cryptocurrencies enter the market through mining.
- Miners do it by solving complex computational problems involving hashing.
- Like the U.S. Dollar, cryptocurrencies are not governed by the central bank and follow a decentralized model.
Can I Use Cryptocurrency to Make Payments?
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