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What is Cryptocurrency?

A cryptocurrency is a form of payment that you can use to buy goods and services online. Unlike the US Dollar or Pesos, there is no central authority that manages and maintains the value of cryptocurrency. The value of these tokens depends on the users who invest in them. Many companies have created their own currencies such as Bitcoin, Ethereum, Litecoin, Cardano, Polkadot, Stellar, Chainlink, Binance Coin, Tether, Monero and more. They are also called tokens; some companies have accepted this type of payment like tesla, Microsoft, Starbucks and more. When you think of these cryptocurrencies, think of them as casino chips or arcade tokens. You'll need to exchange real currency like the US dollar to own a cryptocurrency. Cryptocurrencies work using a technology called blockchain. A blockchain is an open, distributed ledger that records transactions in code. Transactions are recorded in "blocks" then linked together on a "chain" of previous cryptocurrency transactions. To prevent fraud, each transaction is checked using one of two main validation techniques: proof of work or proof of stake.

Why is cryptocurrency so popular?

There are a number of reasons why cryptocurrencies are appealing to their supporters. Here are some of them:

  • They see cryptocurrency as the future and are racing to buy them now before the prices go up more.

  • Cryptocurrency removes central banks from managing the money supply. Over time, these banks tend to reduce the value of money via inflation.

  • The technology blockchain makes it more secure than traditional payments.

  • Cryptocurrencies go up in value. They have no interest/meagre interest rates when you want to move money, like sending cash in a different country; it is also fast.

How do I buy cryptocurrency?

To buy cryptocurrencies, you will need a "wallet," an online app that can hold your currency or on peer-to-peer networks. Basically, you have to create an account on an exchange like eToro, Bitfinex, Tradestation, Sofi Active Investing, Robinhood, Cash App, Coinbase, and more. Then you can transfer real money to buy cryptocurrencies such as Bitcoin. Also, you can use a cryptocurrency you own to convert it to a different currency. Just be aware of the fees; some exchanges have 0 fees, and some charge fees depending on the exchange. Just keep in mind that buying individual cryptocurrencies is like buying stocks. Suppose you put all of your money into one security. In that case, you take more risk than if you spread it out over different securities. CAUTION! This is not a sure thing. You still have to do your homework and invest smartly.

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