Those who are financially astute are always looking to broaden their portfolio when it comes to traditional investments. They place their money in banks or buy bonds, stocks and properties. These days, cryptocurrencies have attracted many who are looking for alternative investments.
Since Bitcoin was created in 2009, cryptocurrencies have sprouted all over the world. And now, there are over 10,000 cryptocurrencies out in the market. Cryptocurrencies are technically digital money—spendable, interchangeable and tradeable electronic assets that are created on the blockchain. They are stored in what is known as a digital or crypto wallet.
While usual financial institutions hold the majority of the money in the world, many people still retain a dislike for the power and control these established systems have over their money and transactions. There are security protocols practiced in banks, but there is dissatisfaction regarding the speed of transactions, the fees they take for each fund transfer, and the incidents of hacking resulting in the loss of customer savings and data.
Account holders are also required to maintain minimum balance and may not immediately receive or send certain amounts even in cases of emergency. These are some of the reasons a lot of people have opted to deal in cryptocurrencies, which is quite like running one’s own bank.
Types of Cryptocurrencies
In the same way that investing and trading stocks is not risk-free, high volatility in the value of cryptocurrencies pose risks. Its value, which is not the same as fiat currencies, can double or halve in a space of days. One may be just curious about crypto, or is seriously interested in investing in it, but either way, the endeavor requires a lot of study.
Cryptocurrencies like Bitcoin, altcoin and stablecoin can be bought and traded on crypto exchange sites. Bitcoin is the most widely used coin, and some of its more popular implementations include Bitcoin Core (BTC), Bitcoin Satoshi Vision (BSV) and Bitcoin Cash (BCH).
Altcoins, on the other hand, are cryptocurrencies aside from Bitcoin. Some well-known altcoins are Ethereum (ETH), Litecoin (LTC) and DASH. Stablecoins are a type of altcoin that have been technically tweaked so that its price is pegged to a fiat currency, which then lessens its volatility. An example would be the United States dollar stablecoin (USDC).
Using Crypto Wallets
Acquiring crypto requires the buyer to open an account and a crypto wallet where one can keep and control these assets. Like a physical wallet, one may transfer funds, trade and purchase services and items using this crypto wallet. To open and use this wallet, the owner must have a mnemonic key phrase that acts as a password.
The owner must make sure not to lose or forget the passphrase. It is wise to put it on paper and think of a safe repository for it or have it stored in several safe places. Hardware and flash drives can be used to save these, and it is only common sense to have a backup storage for the security of one’s assets in case the original is compromised.
The value of cryptocurrencies has risen since it was first introduced, and in spite of the usual cycle of fluctuations, they have withstood the test of time. People have learned to appreciate this type of asset as so many people have gained another way to earn some extra cash. However, it is always advisable, as when dealing with any kind of financial asset, to be extra cautious.