If you have a little extra cash you’re looking to invest, there are a lot of great options out there. But cryptocurrency is the newest and most popular form of investment in recent years.
But even the idea of cryptocurrency confuses people. What is crypto? Why is it different from the notes in your pocket? How can you spend it? We’ve got all the details here for you to make an informed decision on where to put your money.
What is cryptocurrency?
Cryptocurrency is the newest form of digital payment system, which doesn’t need banks to function. It appeals to users due to its ability to make transactions without the need of the bank to verify them. They can be thought of like a casino chip, without the physical element.
Crypto can be tailored to a specific company and can be swapped for goods and services online, however its main selling point is its security. It uses strong cryptography to ensure a secure online transaction, which is another advantage over regular bank-verified transactions, which are less secure.
What are the biggest cryptocurrencies worth?
By far the most famous and widely used currency, Bitcoin has a market capitalisation of $892 billion (or £659 billion). Behind it is Ethereum, which is worth $380 billion (£280 billion) and then Cardano at £71 billion (£52 billion).
The ten largest trading cryptocurrencies also include Binance Coin at $69 billion (£50 billion), Tether at $68 billion (£50 billion), XRP at $47 billion (£34 billion), Solana at $45 billion (£33 billion), Polkadot at $30 billion (£22 billion), Dogecoin at $28 billion (£20 billion), and Terra at $15 billion (£11 billion).
How do I buy crypto?
Crypto acts like most other stock, so if you have that know-how you’re already on your way, however buying crypto does take some additional considerations. For one thing, some cryptocurrencies like Bitcoin, can be purchased with real world currencies like U.S. dollars or British pounds, but others will require another cryptocurrency to buy them. This can be advantageous, as this will force you to diversify your investments as you buy one crypto in order to buy another. That way, if anything negatively affects the stock, you haven’t lost everything.
Before you can buy anything, however, you will need a “wallet”. A wallet, in the digital world, is a mobile app designed to hold your currency. Applications like Binance, Coinbase or Trust will allow you to use their wallet to transfer real money to buy cryptocurrencies.
Once you have these, you will have to do some research. Learn what you can about cryptocurrency exchanges so that you can make an informed decision on which one is best for you. Look at who owns the company and any other major investors, ask if you will own a stake in the company or just the currency. Is the currency in the process of developing or already developed? You’re looking for a safe investment so the more developed a currency is, the better.
If you’re looking for help, there are accountants in Manchester who can help you understand where to put your money and help you make an informed decision.
You can buy cryptocurrencies from online brokerages like Binance.US, Coinbase, eToro, and Gemini.
What should I look out for?
Crypto has unfortunately developed a trend where it is mainly affected by celebrities, so remember that a bad word from Elon Musk has been known to tank Bitcoin for example. You should prepare for very high highs and very low lows.
Plus, we’re talking about money, so naturally there will be a lot of greedy people looking to take it from you. Look into pump and dump schemes, avoid websites that are made to appear as start-up companies and check reviews of apps to avoid being scammed.