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.

  • Bitcoin: market capitalization $821 billion
  • Ethereum: market capitalization $353 billion
  • Tether: market capitalization $68 billion
  • Cardano: market capitalization $67 billion
  • Binance Coin: market capitalization $64 billion
  • XRP: market capitalization $44billion
  • Solana: market capitalization $41 billion
  • USD Coin: market capitalization $31 billion
  • Polkadot: market capitalization $28 billion
  • Dogecoin: market capitalization $26 billion

  • 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.

  • Low-cost access to cryptocurrencies
  • Eliminates the steep learning curve by outsourcing
  • 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.

    Advantages

  • Usually, the process of transacting in cryptocurrency is straightforward and quicker.
  • It is also secured since all transactions get recorded in Blockchain.
  • Crypto can also offer protection against inflation.
  • It is decentralized and aims at eliminating intermediaries like banks.
  • Enthusiasts believe it to be the currency of the future.
  • The use of Blockchain and cryptography make cryptocurrency hard to counterfeit or double spend.

  • Disadvantages

  • There are chances of losing your entire digital money or wallet if there is data loss.
  • The value of cryptocurrency fluctuates frequently. Hence, the risks of investment are high. Most investors may not feel safe investing in crypto coins.
  • It is not regulated by any investment standard.
  • A currency may lose its value entirely if people stop using it and become worthless. It magnifies the risks.
  • These are vulnerable to scams and can be used in illegal trades.
  • Conclusion

    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.

    FAQs

    What Is Cryptocurrency in Simple Words?

    Cryptocurrency is virtual money or digital tokens used over the internet for transactions like fiat money. Cryptocurrency information gets stored in Blockchain - a decentralized ledger technology, which makes it secure.

    How Does Cryptocurrency Make Money?

    Users can make money through mining. It is a process through which new cryptocurrencies enter into circulation. The miners receive cryptocurrencies as rewards for completing blocks of verified transactions, which get added to the Blockchain. But to do it, one needs a good understanding of the basics of cryptocurrency.

    What Are the Most Popular Cryptocurrencies?

    Bitcoin is the most popular cryptocurrency. Besides Bitcoin, Ethereum is the second-largest cryptocurrency. Some other popular cryptocurrencies are Tether, Solana, Polkadots, and Dogecoin.

    How can I use cryptocurrency?

    You can use cryptocurrencies for making payments against products from companies that accept cryptocurrency payments.

    How can I acquire cryptocurrency?

    You can buy cryptocurrencies using real money. There are three ways to buy crypto assets: cryptocurrency exchanges, brokerage, and payment services. Here are the steps.
  • Choose an exchange or a crypto broker
  • Complete KYC formalities
  • Add funds
  • Place an order
  • Select a storage method: hot or cold wallet storage
  • How do I store my cryptocurrencies?

    You can choose between hot wallet storage or cold wallet storage. The hot wallet storage uses computer software and private keys for storing cryptocurrency information. Conversely, cold wallet storage uses an offline electronic device or hardware for storing your assets.

    What is the difference between U.S. Dollar and Cryptocurrency?

    - Cryptocurrencies are digital coins, whereas the U.S. Dollar is fiat money.
    - 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?

    Yes, you can use cryptocurrencies to make payments to companies that accept them.
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