2021 has seen what can only be described as a boom in the world of cryptocurrency. With Bitcoin hitting an all-time high of $40,000, other cryptos have also seen a steady increase in value. It appears that the huge instability of crypto is becoming a thing of the best: as the market has matured and with investors such as Microsoft seeing it as a safe haven, there has certainly been a shift in thought where crypto is concerned.
Knowing if crypto is worth investing in is not a simple question to answer. Yes, you could text crypto questions to your best friend or even your financial advisor, but you are unlikely to receive a well-informed opinion. When it comes to understanding crypto, it is worth investing in your education so that you can make the choice that is right for you. If you are keen to get in on the boom of crypto, here’s a look at what you need to know before you take the plunge.
What is crypto?
Crypto is a digital currency that exists online and works by utilising technology known as blockchain. The appeal for many of cryptocurrency is that it is decentralised. This means that it is not controlled by any government or single person.
The best-known crypto is Bitcoin. This crypto also has the highest value at present. Back in 2010, a single Bitcoin was worth around $0.08. Fast forward to 2021 and the value has exploded hitting a record high of $40,000 in January. Other popular cryptocurrencies include Litecoin, Euthereum, and Dogecoin. None are close in value to Bitcoin, but all are showing steady growth.
How do you buy crypto?
While it is possible to mine for crypto, the most common way to acquire it is by buying it. The likes of Bitcoin can be bought with cash, using the US Dollar. Other cryptos require that you already have crypto in one form or another, usually Bitcoin, and that you pay with that.
To buy any crypto, you need to find a reliable exchange. Once you have this, you can sign up, create an account, and then set up a wallet. This then allows you to trade actual money and cryptocurrencies. A wallet acts in a similar way to a traditional bank account in that you are able to see all of your crypto transactions, and is a place where funds can be sent. How it differs from a bank account is that whereas a bank actually holds money, a wallet never actually holds crypto: it just contains the details of ownership of the currency.
How can crypto be used?
For some people and companies, crypto is used just as a form of investment rather than something that is used on a day-to-day basis. The idea being that investing now, and holding on to your investment, will see the value go up, giving impressive returns. Certainly, those who invested in Bitcoin back in 2010 have seen nothing short of phenomenal increases, even if there have been a few dips on the way.
Today, more than ever crypto can also be used for daily transactions. There are now almost 100 online stores that take Bitcoin as payment, as well as online casinos. The fact that PayPal has also started accepting Bitcoin shows that crypto is to be taken seriously and is here to stay.
