Cryptocurrency for Dummies: Everything You Need to Know About It

Cryptocurrency for dummies – Today we will discuss all pros and cons of cryptocurrencies. Let’s take a deeper dive into this sphere.

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By now you have probably heard about the cryptocurrency craze. We can definitely say that these assets are generating hefty waves in the financial industry, also creating an impact in other areas of our lives. Although Bitcoin was the first asset to receive mainstream adoption, the growth of digital assets is outpacing most other coins.

Digital assets give you a chance to get rid of banks and other centralized middlemen altogether. That is because cryptocurrencies rely on a technology called blockchain, which is decentralized (meaning no single entity is in charge of it). Instead, every computer in the network confirms the transactions.

But how much do you really know about them? Today we will discuss all pros and cons of cryptocurrencies. Let’s take a deeper dive into this sphere.

 

What Is It?

A cryptocurrency is a digital currency or virtual coin designed for payments, secured with cryptography. So, it is impossible to counterfeit or double-spend your money.

They do not physically exist. You cannot pick up a bitcoin and hold it in your hand, or pull one out of your wallet. But just because you cannot physically hold them, it does not mean they are not worth anything, as you have probably noticed by the rapidly rising prices of virtual currencies over the past couple of months.

Cryptocurrencies are decentralized networks based on blockchain technology.

The key feature is that cryptocurrencies are generally not issued by any financial authorities, rendering them theoretically immune to government interference or manipulation.

“Crypto” refers to the various encryption systems and cryptographic techniques that are implemented in the currency to keep them safe. For example, elliptical curve encryption, public-private key pairs, and hashing tools.

Check out all pros and cons of these coins and cryptocurrency investing below.

 

Advantages

  • International payments are accessible
  • Fast and unlimited transactions
  • No third-party interference
  • Low fees for an exchange
  • They are not affected by inflation
  • Decentralized
  • Transparency and anonymity

 

Disadvantages

  • High volatility
  • It is quite risky to invest in them
  • Impossible to cancel your transaction
  • They are not widely accepted
  • Lack of knowledge prevents its mass adoption
  • Used for money laundering
  • We can divide cryptocurrencies into several types.

Let’s see what the differences between them are.

Bitcoin

Bitcoin

Bitcoin is the oldest cryptocurrency created in 2009 by Satoshi Nakamoto. BTC is often described as a cryptocurrency or a virtual currency. It is like an online version of cash.

You can use it to buy products, book hotels, and services.

In addition, international payments are easy and inexpensive. The main reason is that bitcoins are not tied to any country or subject to regulation. Bitcoins can be issued without a central bank or single administrator, which can be sent from user to user on the peer-to-peer bitcoin network without the need for intermediaries.

Altcoins are also known as alternative coins or alternative cryptocurrencies that were launched after Bitcoin's success.

Altcoin

Altcoins are also known as alternative coins or alternative cryptocurrencies that were launched after Bitcoin’s success. They generally project themselves as better versions of Bitcoin. Bitcoin’s emergence as the first peer-to-peer currency has paved the way for many to follow. Most altcoins are trying to mimic Bitcoin’s success, target any perceived drawbacks that Bitcoin has and come up with competitive advantages in newer versions.

Many altcoins are based on the basic structure provided by Bitcoin. Therefore, most altcoins are peer-to-peer, and they can be mined by which users solve difficult problems in cracking blocks and provide secure and inexpensive ways of carrying out web transactions. But altcoins, even with many overlapping features, still vary widely from one to another.

Token

Crypto tokens, which are also known as cryptocurrency assets, are special kinds of digital currency tokens that reside on their own blockchains and represent an asset or utility. Most often, they are used in fundraising for crowd sales, but they can also be used as a substitute for other things.

For example, a token can show a number of available customer loyalty points on a blockchain, designed for a retail chain. There can be another crypto token that gives entitlement to the token holder to view several hours of streaming content on a video-sharing blockchain.

A token can even represent other cryptocurrencies, such as a crypto token being equal to 15 bitcoins on a particular blockchain. Such crypto tokens are tradable and transferable among the various participants of the blockchain.

Cryptocurrencies and altcoins are specific virtual currencies that have their own dedicated blockchains and are primarily used as a medium for online payments. On the other hand, the cryptocurrency tokens operate on top of a blockchain that acts as a medium for the creation and execution of decentralized apps and smart contracts, and the tokens are used to facilitate the transactions.

Crypto tokens are usually created, distributed, sold, and circulated via an initial coin offering (ICO) process that involves a crowdfunding exercise to fund project development.

These cryptocurrencies often serve as the transfer units on the blockchains that are created using standard templates like the Ethereum ecosystem.

It allows customers to create tokens. Such blockchains work on the concept of smart contracts or decentralized applications, where the programmable, self-executing code is used to process and control financial transfers within the system.

Stablecoin refers to a range of cryptocurrencies that derive their market value from some external reference. Unlike fiat money, they are backed by a reserve asset like during the Gold Standard Era.

Stablecoin

Stablecoin refers to a range of cryptocurrencies that derive their market value from some external reference. Unlike fiat money, they are backed by a reserve asset like during the Gold Standard Era.

Being asset-backed enables stablecoins to maintain their prices and avoid excess volatility, which essentially defines the market.

How Many Cryptocurrencies Are There?

The number is always changing, but according to CoinMarketCap, more than 9 959 different cryptocurrencies are traded publicly within the cryptocurrency market. Cryptocurrencies continue to proliferate, raising money through initial coin offerings, or ICOs.

In other words, this means that if you have time, money, and a team of people that understands how to write computer code, you have an opportunity to develop your own cryptocurrency and join the cryptocurrency market. It likely means new cryptocurrencies will continue entering the space as time passes.

Volatility: What Affects Cryptocurrency Prices?

The overwhelming majority of participants in the cryptocurrency industry are painfully aware of this concept. The value of cryptocurrency can change wildly in such a short period of time. Here are just a few of the many factors behind price volatility. See what affects the price.

  • Good news, as well as bad news influence cryptocurrency adoption and may cause a public panic. It drives the value of bitcoins versus fiat currencies up and down rapidly. As a result, we see that cryptocurrency can swing based on news events much as we observe with fiat currencies.
  • Large risks for cryptocurrency investors. Cryptocurrency volatility is also to an extent driven by holders of large proportions of the total outstanding float of the currency. For example, for BTC investors with current holdings above around $10M, it is not clear how they would liquidate a position that large into a fiat position without severely moving the market. At the same time, it may not be clear how they would liquidate a position of that size in a short period of time at all, as most cryptocurrency exchanges impose 24-hour withdrawal limits far below that sum.
  • Security and data breaches. Cryptocurrency can also be volatile when the community exposes security vulnerabilities in an effort to produce massive open-source responses in the form of security fixes. This approach to security is paradoxically one that produces great outcomes, with many valuable open source software initiatives to its credit, including Linux. Cryptocurrency developers should reveal security concerns to the community in order to produce robust solutions. Due to the open conversation and debate regarding the network, security breaches tend to be highly publicized.
  • High-profile losses raise concerns. It is not a secret that thefts and news about losses bring a negative effect on volatility. If we talk about BTC, they reduced the overall float of bitcoin, producing a potential lift on the value of the remaining bitcoin due to increased scarcity.
  • Regulations and rules. Because of the rapid increase in popularity of Bitcoin and other alternative coins, regulators are debating how to define those digital assets. While the Securities and Exchange Commission (SEC) classifies cryptocurrencies as securities, the Commodity Futures Trading Commission (CFTC) of the United States classifies bitcoin as a commodity. If the rules become too stringent or repressive, the value of the cryptocurrency drops. On the other hand, if they are favorable to the crypto industry, they can act as a catalyst for rapid growth. Since Bitcoin is decentralized, that is, it is not linked to any particular central government, regulations can have a direct effect on the price since they relate to investors. Essentially, if there is concern about a specific government statement or decision, the price of BTC can fall.

How Can I Get Cryptocurrencies?

Let’s highlight the most popular ways of getting cryptocurrencies. Take a look at them.

Purchasing

It is vital for a newbie investor to know where to buy digital assets. Just a few years ago, there were only a few places to buy and sell cryptocurrencies. Now, though, there are a lot more! Let’s look at the different places and ways you can get your crypto.

Where Can I Buy Cryptocurrencies??

You can find several means of purchasing digital assets right here.

Cryptocurrency Exchanges

It is an online source that lets you exchange your local currency for a digital coin or cryptocurrency for another digital asset. Exchanges are the most popular way of buying cryptocurrency.

There are a lot of exchanges for you to choose from. Each one of them has different levels of security and they each accept different types of payment methods. Most exchanges will ask you to follow the steps below before you can start buying cryptocurrency like signing up, identity authentication, verification of payment method, and personal email.

Broker Exchanges

They are like the currency exchange shops that you find at airports. However, instead of exchanging different local currencies with each other, you can exchange fiat for cryptocurrencies.

ATM

Do you know about Bitcoin ATMs? Well, they do exist. It is a very new idea, but they are becoming more and more popular.

Bitcoin ATMs are just like the normal cash ATMs that we use to withdraw our USDs, EURs, JPYs, etc. The only difference is that you deposit cash in a Bitcoin ATM, instead of withdrawing cash as you do with normal cash ATMs.

Mining

Cryptocurrency mining is a process in which a machine performs certain tasks to obtain a little bit of cryptocurrency. The process of mining is also responsible for introducing new coins into the existing circulating supply and is one of the key elements that allow cryptocurrencies to work as a peer-to-peer decentralized network, without the need for a third-party central authority.

Bitcoin is the most popular and well-established example of a mineable cryptocurrency, but it is worth noting that not all cryptocurrencies are mineable.

Trading

The trading process is a set of buy and sell actions every user performs on a cryptocurrency exchange.

It is exciting, and it can bring a huge profit. If it suits you most, you should keep in mind that it is quite risky.

You can win and lose a large amount of money quickly. Since cryptocurrency prices are so volatile, it’s not uncommon for traders to lose money quickly trading cryptocurrencies (that is why so many crypto enthusiasts just buy via exchange and HODL their crypto funds). So, you should learn more about the risk-management process in advance, read useful tips from authoritative traders and be aware of the latest trends.

I Have Learned About Cryptocurrencies. What Is Next?

Hopefully, you have boosted your skills about cryptocurrencies, accessible in the market. You should understand the difference between them, their ecosystems, blockchain systems, technical differences, and history.

Finally, you should be able to make a choice between them. Based on this info published above, we will leave the choice of whether to invest to you. You should keep in mind that cryptocurrencies can live side by side, and be a part of your portfolio.

Key Things That You Should Remember Before Investing

The first thing you should know is that all investments will have their pros and cons. Despite the exciting functionality both of these coins offer, the technology and the cryptocurrency industry are new and volatile. You should prepare for extreme volatility in this ecosystem. Just imagine that altcoins have a chance to surge up to 40 – 50% in a single day.

You should not get upset if things are harder at the beginning. You will boost your skills and will be able to build your own investment strategy over time if you put some effort into it.

Unfortunately, most people do not do this and they put themselves in a dangerous situation.

When someone is alone with no accountability or guidance, they tend to struggle to find ideas and lack credible information. In uncertainty, when finding relevant sources is uneasy, they might resort to watching and mimicking other, presumably better informed, investors’ decisions. And it leads to huge mistakes. In other words, they often make the same mistakes over and over again. Simply put, this is not a good recipe for success. Without any research, they do not have a financial strategy and have a great chance to lose their money, even HODLing cryptocurrencies.

Before you make your first transaction, please, research background info on each cryptocurrency on their websites, threads on Reddit, and other social media platforms. Yes, it will take a lot of time and it is nearly impossible to compare two assets correctly. But it is really worth it.

In order to check out everything you need to know about the coin, you have to do hours of research and pay close attention to free resources that will help you with this.

If you have found a cryptocurrency that suits your strategy, you can make your first step towards investing. We have a solution that will definitely help you.

Where Can You Buy and Sell Them?

Are you ready to make your first purchase? We have a service, suitable for you. Take a look at NeuronEx, where. You will be able to get cryptocurrencies quickly and easily. Find out everything you need to know about this platform.

Is It Possible to Buy and Sell These Coins on NeuronEx?

Yes, you can. This is a platform designed for financial transfers such as crypto to fiat and crypto to crypto exchange. You will be able to convert cryptocurrency (including Bitcoin) quickly and securely right here.

It has a user-friendly interface and its useful tools make the purchasing process smoother than ever before.

Moreover, it offers a great range of payment methods. Among 200 means of payment, there are debit and credit cards, wire transfers, and bank account.

Is it possible to buy and sell these coins on NeuronEx?

As a bonus, NeuronEx also has an app accessible for Android and iOS customers. When it comes to mobility and convenience, it is incredibly popular among cryptocurrency fans. Track currencies, use a converter, and manage your budget all in one place.

How Can I Make a Transaction?

It is quite simple: you may use a converter, available here. Sign up for free, choose the most suitable type from the list of payment methods (credit card or wire transfer), and make your first exchange.

As a perk, we have no hidden commission for the cryptocurrency purchase. You can buy and sell cryptocurrencies at a good rate and almost zero fees.

Supported Cryptocurrencies

NeuronEx platform supports not only Bitcoin but also:

  • Neuron;
  • Litecoin;
  • Ethereum;
  • Ripple;
  • Emercoin;
  • Dash;
  • Dogecoin.

But that is not all. Our team is working hard to implement new cryptocurrencies. So, the best is yet to come. EOS, Bitcoin SV, Tether (EURT, USD, CNHT, XAUT) are coming soon.

Supported cryptocurrencies

NeuronEx Online Wallet

And last but not least, you need a place to store your money no matter if you prefer mining, trading, or storing money.

Simply put, once you have gained a cryptocurrency like Bitcoin on an exchange, you will need a safe place to store your holdings. Using an online wallet, instead of keeping your cryptocurrencies with an exchange, gives you greater control over your virtual money.

These online wallets provide users with a great solution for securely storing assets and managing digital money. These online wallets allow users to send and receive money, store and spend, and also trade cryptocurrencies.

So, you should also try an online wallet, accessible on NeuronEx.

It is a great place to store your money. It is safe and secure. You will be able to access and manage your portfolio in a real-time mode and control your digital money. Make transfers anonymously, convert and send coins all in one place.

In Conclusion

We hope that our article will be helpful for you. By now, you know about cryptocurrency investing, its pros, and cons. So, you should keep in mind everything that we have mentioned above.

That is all for now, stay tuned for more great content!

Cryptocurrency for dummies – Today we will discuss all pros and cons of cryptocurrencies. Let’s take a deeper dive into this sphere.

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