Despite being treated as something ripped out of a sci-fiction book, cryptocurrency has come a long way since the debut of Bitcoin about 12 years ago. It’s derived from the word ‘crypto,’ which comes from cryptography, the art of solving puzzles. It also originates from the word, ‘currency,’ which refers to a means of exchange for goods and services.
Therefore, it refers to the virtual currency created by using codes and secured by cryptography, as well as virtual or digital assets, which are considered as the emerging type of asset class like non-fungible tokens (NFTs).
Fiat Money VS. Cryptocurrency
However, what is the difference between cryptocurrency and the fiat money most people use today? It’s common knowledge that money is a requirement in any financial transaction. It serves as the representation of a particular value. In ancient times, civilizations used denomination money in livestock, seeds, and so on. In modern days, fiat money is used. In simple terms, it’s the physical money, like paper bills and coins. It’s the legal tender issued by the government and is the most dominant iteration of money.
As history has shown, money continues to evolve, with the emergence of cryptocurrency. Cryptocurrency was operated with decentralized blockchain technology or a database where an extensive, peer-to-peer network computer records the transactions in blocks or chunks. A decentralized structure means the system is designed to keep cryptocurrency away from centralized institutions, such as banks and governments. Bitcoin (BTC) is the most popular digital currency, but there are alternatives often referred to as altcoins, including Ethereum, Tether, Litecoin, Binance Coin, Ripple, and Cardano.
El Salvador recently embraced BTC as one of its legal tenders, and in Australia, cryptocurrency is considered property and investment subjected to tax. If you’re a newbie to everything about cryptocurrency, you can continue reading this article to understand the core ideas behind investing in cryptocurrency.
1. Choose A Trading Platform
If you want to buy cryptocurrency, you must first obtain a digital wallet to hold your currency. Many trading platforms let you set up an account and require you to transfer fiat currency, such as Australian dollars, to buy digital coins, like Bitcoin or Ethereum.
Each individual has their preferences and trading goals that dictate which cryptocurrency exchange they choose. Some might select various coins simultaneously while others want advanced trading features to let their investments grow fast.
Here are the main things you should consider when choosing an exchange:
- accessibility
- the authenticity of the company and platform security
- customer support
- fees and any hidden charges
- trading features
- number of coins offered
- method of payment
- educational content
- the ability to buy coins directly (possible with most Australian exchanges)
Take your time to do your research when choosing a trading platform. You could read customer reviews and look for an exchange that’s transparent about what they are and what fees they charge.
2. Sign Up And Verify Your Email And Account
This step is pretty straightforward. Once you have selected the crypto exchange that suits your preferences best, choose your username accompanied with the password. Don’t forget to fill out your personal information and set up two-factor authentication for an added layer of security. From there, all you have to do is verify your email and identity by showing a valid ID like your passport.
3. Understand The Fundamentals Of Cryptocurrency Investments
Now that you have opened and verified your account, you must learn how cryptocurrency investments work. If you’re still new in this cryptocurrency space but have knowledge of traditional stocks and shares, you’re in good hands because these two are almost similar in terms of profit generation.
The objective of cryptocurrency is buying a digital coin and selling the token for a higher price. If you can do this, you’ll make a profit.
4. Select A Payment Method
Once you know how to invest in cryptocurrency, what’s left to do is practice what you have learned. Add your bank account, select your preferred payment method, and deposit Australian dollars into your account.
5. Buy The Cryptocurrency You Want To Trade
Once your account has funds, you can now begin buying any cryptocurrency, depending on your preference. To begin buying, access the buy/trade crypto section of the website and select the crypto you choose. This is one of the simplest and easiest steps, but you should still start small if you’re a beginner.
6. Double-Check The Details
After entering the amount of money you will invest or how many tokens you will buy, always double-check the details to see if they’re correct. It won’t hurt to make sure where your investment is going before confirming your purchase.
Final Thoughts
Cryptocurrency is a growing, viable investment potential worth considering. Many unprecedented returns are made evident by the rise of the valuation of Bitcoin and other altcoins. Now is the right time to invest and diversify your financial portfolio.