Many people have a lot of questions about cryptocurrency. After all, it’s a bit difficult to fathom what digital currency is, and it’s even harder to understand where its value comes from. Not to mention that it’s still a relatively new concept. And, on top of all of that, when you seek out answers, you are often met with dense articles full of technical jargon that doesn’t make sense.
Thankfully, you don’t really need to understand all of the technical things about cryptocurrency in order to appreciate it and start investing. Instead, you can solely focus on what it can do for you.
We’re going to talk about how you can get into cryptocurrency and start understanding why people go nuts over things like Bitcoin prices. And yes, we’ll explain it all in plain English so the answers actually make sense!
What exactly is cryptocurrency?
It’s essentially a digital currency that is “decentralized.” This pretty much means that it’s not managed by the government, like national currency, and is instead managed by private encrypted databases.
The value of cryptocurrency is completely determined by the market and miners.
How is cryptocurrency made?
Much like how we’re paid for our work in the real world, Bitcoin miners are paid for performing digital work. To put it simply, miners are paid for solving really complex math problems. It’s not the kind you can do on pen or paper—we’re talking about problems that need multiple computers and their processing power to solve.
But what are these complex math problems for?
They essentially protect the Bitcoin network. It guards the system to ensure that hackers can’t easily crack it open and double-spend their currency or generate new currency.
How do you get started with trading Bitcoin?
The easiest way to start is to sign up for a digital currency exchange.
They’re so advanced these days that you can even download something to your phone and start trading right away. It’s easy to get started with all the different guides and videos you can find. Some even offer demo accounts where you can try it out.
Isn’t this essentially gambling?
If you look at Bitcoin’s prices over a long period of time, you might notice it fluctuates often. You might think that investing in cryptocurrency is a huge gamble.
But nothing is ever completely random.
Whenever you invest, you are buying something and hoping that it’ll increase in price over time. That’s how you make money.
In most cases, you can keep up with tech news to see if cryptocurrencies become more or less popular over time. For example, if a particular cryptocurrency is endorsed by a famous tech influencer, then there’s a good chance it’ll increase in price.
Similarly, you might find that some cryptocurrencies increase in price after they release more information about it or host a developer conference.
In other words, the price isn’t completely random. There are some things that can make it go up and down and it’s your job to keep up with the latest news so you know when to hold or sell.
We hope these questions about cryptocurrency (and their answers) help you understand this concept better. If you decide to invest, having a strong understanding of the market is important! And if you simply want to impress someone with your knowledge, then you can do that now too.