UNDERSTANDING OF DIGITAL CURRENCY A.K.A. CRYPTOCURRENCY
At present, you should have little knowledge of bitcoin, which is the most famous digital currency and the foremost to be accepted. Other digital currencies like Ethereum are becoming famously known. More than 1000 diverse digital currencies exist and more are being brought to light.
You must have been hearing of this digital currency here and there, and you’re like “what is it all about? is it safe? How do I go about it?. This article will aid in answering your questions.
What is a digital currency a.k.a. CRYPTOCURRENCY?
Cryptocurrency or digital currency is a digitally wired money disbursement system that doesn’t depend on financial institutions to validate transactions.
It is a person-to-person medium that enables anybody globally, to transfer and get back the money. You don’t even have to be physically present in the same location as the person you’re sending money to.
Money transferred using digital currency is entered into an open record. Cryptocurrency is kept in an electronic wallet.
The name cryptocurrency was derived from the use of encryption to validate transactions. So, it simply means that some level of advanced coding is used in keeping and transferring cryptocurrency from one wallet to another and to open records. The encryption is meant for providing security and the safety of funds.
How safe is cryptocurrency?
Cryptocurrencies are structured based on Blockchain technology. The term Blockchain in this context refers to the way transactions are entered into “blocks” and time-stamped. It is quite a complicated process, but it results in an electronic record that is impenetrable to cyberhackers.
Going further, transactions, need something called a “ 2- factor authentication process”. Let’s say for example you are asked to provide s username and password for a transaction to begin.
Consequently, you may have to input an authentication code that’s sent via text message to your personal mobile device, and of course, only you have access to the codes.
Guides to securely investing in cryptocurrency
Generally, investments are normally a risky option, professionals will say that cryptocurrency is one of the riskiest investment options at the same time they are also the most attractive merchandise.
If you have plans of investing in cryptocurrency, below are some tips that can aid you in making smart choices.
1. Do detailed research on cryptocurrency exchanges.
Don’t invest 1 kobo without doing your homework on cryptocurrency exchange platforms. This brings forward the way to purchase and sell off digital currencies. There are over 200 platforms for crypto exchange to select from. So, you need to do your research and talk to experienced investors before you invest your money.
2. Understand how to keep your cryptocurrency.
When you purchase a digital currency, it needs to be stored. It can be stored in a verified electronic wallet or on a cryptocurrency exchange. There are many electronic wallets out there, each with its advantages, and other added features. Ensure you do your thorough research before putting money into cryptocurrency.
3. Expand your scope of investments.
The sure way to any great investment method is diversification and this strongly applies to cryptocurrency investments as well. As the popular saying goes “ do not put all your eggs in one basket”.
For instance, don’t put all your money in Ethereum or litecoin because of their popularity. There is a variety of other currencies to invest in. This is one of the best steps to take in investing in cryptocurrency.
4. Be equipped for volatility.
There are many highs and lows in the cryptocurrency market due to its volatility. You will be experiencing astonishing swings in prices, if the amount you invested cannot take it or your mental health status can withstand extreme price dips, cryptocurrency is not just the best thing for you.
Putting money in cryptocurrency comes with a lot of risks and obstacles, so you best be well prepared for it. It requires a great deal of patience and relentlessness. Endeavor to do thorough research before venturing into cryptocurrency.
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