Cryptocurrency investing might sound cryptic if you are unfamiliar with the language and software. Unlike typical currencies, governments and banks do not control these digital “coins” and have no effect on their value. Cryptocurrency is completely digital and does not have a physical form, such as paper bills or metal coins.
Several digital currencies are available to purchase on the cryptocurrency market, and new ones are emerging each week. New coins are made available through the process of “mining.” You can invest in a coin type once it becomes public.
High-powered computers solve complex mathematical problems on a specific network, like the Bitcoin network. Solving these math problems secure the network from attackers, and the network gives miners coins or tokens in exchange.
These mathematical problems deal with “hashes,” which are long strings of seemingly random numbers and letters. A hash is a message or a piece of data.
Miners are making the data more secure by changing the message into a hash since it is almost impossible to determine the original input. In other words, the process of mining alters information to make it more secure from attackers.
These hashes form blocks, or groups, of transaction history. As the blockchain becomes longer, the ability to alter older transactions becomes more difficult. The cryptocurrency market is a place to exchange these digital currencies. Several websites and applications allow you to buy, sell, and trade cryptocurrency.
Thousands of digital currencies exist. The biggest and most popular coins include the following:
- Bitcoin
- Litecoin
- Ethereum
- Ripple
- Bitcoin Cash
- Chainlink
- Tether
- Binance Coin
Before deciding which crypto to buy, you likely need a cryptocurrency wallet to send and receive any of the above alt-coins. You can establish a wallet easily by signing up with a cryptocurrency investing site, such as Coinbase, Robinhood, and Kraken.
A cryptocurrency investment can be risky since they are extremely volatile in comparison to other investments, such as mutual funds. However, many investors believe that they are the currencies of the future. In fact, more businesses are accepting crypto-coins for payment of goods and services, including Whole Foods and Nordstrom.
