With Bitcoin, Dogecoin, Ethereum, the cryptocurrency industry is growing rapidly, driving the crypto frenzy these days. Although the crypto industry is only a decade old, novice investors are attracted to it because they see a quick way to make a profit.
Unlike the stock market, the crypto market has no control, as a result of which its value goes up and down every day. Here is what you need to know before investing in the cryptocurrency market, given the extreme volatility of these digital coins.
What is cryptocurrency?
Cryptocurrency is a digital asset that you can use for investing and even shopping online. It is protected by cryptography, which makes it almost impossible to counterfeit or double the cost.
It’s worth noting that cryptocurrency doesn’t exist physically, which means you can’t pick up a bitcoin and hold it in your hand. And unlike the Singapore dollar, there is no central authority that maintains the value of the cryptocurrency. Instead, these functions are widely distributed among users of cryptocurrencies via the Internet.
Further, each currency of the cryptocurrency consists of a unique line of programs or code. This means they can’t be copied, which makes them easier to trade and identify.
How does it work?
Cryptocurrencies are not supported by central authorities such as the government. Instead, they move across a chain of computers. It is exchanged peer-to-peer on the web without a mid.
Cryptocurrencies are decentralized, meaning no government or bank manages how they are made, what their value is, or how they will be exchanged. All crypto transactions are protected by cryptography – meaning that it allows only the sender and the intended recipient of a message to view its contents.
Is cryptocurrency like a blockchain?
No. Blockchain is the technology that enables the existence of cryptocurrencies. A blockchain is a digital ledger of transactions that is distributed across the total network of computer systems. Think of it as a book that shows the whole history of that currency.
Simply put, it is a data recording system that makes it impossible to hack the system. Each block of the blockchain contains several transactions and each time a new transaction occurs, a record of that transaction is added to each participant’s ledger.
A blockchain database can store a large amount of information that many users can use and access at the same time.
But what makes Blockchain unique is that it is not owned by a single person or entity – it makes it more secure and trustworthy. The idea is that no one controls the blockchain, so they can’t capture and rewrite records.
How can you save your cryptocurrency?
Cryptocurrency can be stored in something called a ‘wallet’, which can be accessed using your ‘private key’ – the crypto equivalent of a super-secure password – without which the crypto owner cannot access the currency.
A crypto wallet stores private keys that give the user access to their cryptocurrency — allowing one to send and receive cryptocurrencies such as Bitcoin and Ethereum. It should be noted that your coins are stored on a blockchain and a private key is required to allow those coins to be transferred to another person’s wallet.
There are different types of crypto wallets available that meet different requirements in terms of security, reliability, accessibility, etc.
How to buy cryptocurrency?
Like the stock market, the crypto market has exchanges or brokers that are facilitators. This exchange often charges a fee or commission for every transaction. Some even give rewards for hitting a milestone, some give as a joining bonus. This policy may differ with every exchange.
Singapore’s top crypto exchange in —Singapore digital exchange— users need to sign up with their KYC certificate and buy cryptocurrency. These exchanges help you monitor the value of the cryptocurrency and buy or sell it.
Crypto exchanges rely on investors to acquire cryptocurrencies. This happens when users deposit crypto to sell and some new users come to the exchange to buy it this makes trading easier.
Cryptocurrencies can be bought infractions. For example, if you want to buy a bitcoin, you do not have to buy the full bitcoin (BTC) to own something. You can buy a fraction of a bitcoin. You can buy crypto as low as 0.00000001 BTC. This is true of all cryptocurrencies.
What can you buy with cryptocurrency?
India is slowly opening up the idea of adopting it as a legitimate payment method. Cryptocurrency has some practical problems — because it cannot be used properly for day-to-day transactions. However, there are ways to use your crypto to simplify payments.
Singapore Digital Exchange, a bitcoin trading site,
In the United States, retailers such as Whole Foods, Nordstrom, ETC, Expedia, and PayPal are now allowing people to pay using crypto.