Cryptocurrencies for Beginners: 9 Tips to Get Started

You’ve probably heard of cryptocurrency in the media or through someone you know. But what exactly is a cryptocurrency? How do they work? Why do people invest in digital assets?

In this article, we are going to look at some Cryptocurrency Basics that you need to know to get started fast.

Cryptocurrency is a digital currency designed primarily to serve as a mode of exchange. These are not issued by any central authority except for traditional fiat currencies such as the dollar or the euro, which makes them potentially safe from government interference or manipulation.

Bitcoin and most cryptocurrencies operate through a technology known as blockchain or blockchain. A blockchain is a network of interconnected computers that keeps track of all transactions made from that cryptocurrency and who owns them.

Cryptocurrencies are generally decentralized, allowing the issuer to transfer values ​​to any part of the world, at any time and in any amount without the intervention or permission of any third party, such as a bank or government. In an operation, only the sender and receiver are involved.

The most common way to create a cryptocurrency is through a process called mining. This is the method used by Bitcoin where computers solve a mathematical problem to verify the transactions performed on the network. As a reward, computer owners receive new cryptocurrencies.

The mining process uses a lot of energy, which is why many other cryptocurrencies use different methods to create and distribute their tokens, with little impact on the environment.

The main advantage of most cryptocurrencies is the use of digital money to transfer money, i.e. to buy items, products, services, and send money to family members or friends. Bitcoin would be a clear example.

However, there are other alternative uses that are given in its creation in the nature of cryptocurrency, which allows performing different functions. This would be the case with Ethereum, which lets you program “intelligent contracts”, which automatically transact when a series of conditions are met.

Regardless of the utility that each cryptocurrency may have, it should be noted why these digital resources are currently being purchased and used for speculative purposes.

There are currently thousands of cryptocurrencies and that number will probably continue to grow day by day.

Many of these cryptocurrencies are part of a technology project that will bring solutions to the cryptocurrency ecosystem. Others, but, were created purely for speculative purposes and for some potential scams or deceptions. This is why it is so important to do research before buying a cryptocurrency.

The most important cryptocurrencies according to their market capitalization are currently: Bitcoin (BTC), Ethereum (ETH), Tether (USDT), BNB (BNB), USD Coin (USDC), XRP (XRP), Cardano (ADA), Solana (SOL), Terra (LUNA) and Avalanche (AVAX).

We are going to see a small classification of the types of cryptocurrencies that exist.

Currently, the term “cryptocurrency” is commonly used to refer to most of the existing digital resources.

But if we want to talk a little more specifically, cryptocurrencies are those that, because of their versatility, trust, and ease of use in value transfer, can be used as a means of payment. Example: Bitcoin (BTC)

The tokens fulfill functions according to the project to which they belong. The best known is Ethereum (ETH), which can be used to pay commissions for using its network.

Stablecoins or stable coins, as the name implies, are cryptocurrencies that were created to be stable in price. That is, its value is 1:1 with fiat currencies such as the dollar, thus, its price does not fluctuate.

An example is Tether (USDT): value of 1 USDT = 1 US Dollar

The most common sites for obtaining cryptocurrency are Exchange, a dedicated web platform for cryptocurrency trading.

To buy cryptocurrencies in an exchange you just have to follow these steps:

The wallets are responsible for managing the keys to access your funds.

But, the most important thing is to learn how to use the wallet and how to do it safely.

There are two types of wallets or wallets

One of the main reasons people buy cryptocurrencies is to invest.

Investing in cryptocurrency is one way to get our money back, but it requires mastering the basics and researching various projects.

It is important to remember that this is a type of investment that carries a lot of risks.

The concept of investing in cryptocurrency is to explore a crypto project, to analyze it, to know if it performs any function of the ecosystem and whether it provides an effective solution to a real problem.

After conducting the research you will be able to get a clear vision of the project, find out if it has a future and scalability in the ecosystem. As the development and impact of the project become positive, it will be reflected in the value of your cryptocurrency, which will increase in value, and the investors who bought the cryptocurrency in the early stages of the project will benefit from the price increase.

In addition to investing, there are other ways we can make money with these new financial resources. Some examples are trading, mining, stacking, or farming.

So far we have talked about the basic ideas that a beginner who is taking the first step in cryptocurrency should know.

Here are some tips that will be useful if you do not know where to start in the world of cryptocurrencies:

Learn how it works, the most commonly used terminology, and various projects. Lots of information is available in various formats like books, videos, or blogs.

The best way to understand its effectiveness and see its potential is to practice. Buy some cryptocurrencies, transfer funds, open a wallet and interact with different protocols. You do not need to use large sums of money, you can start with a small amount like $ 10 or $ 20.

The best cryptocurrency to start with is the largest and most capitalized project. Initially select a few of them, for example, some smart contract networks like Bitcoin (BTC) and Solana (SOL) are good places to start.

Exchanges also start with some of the largest and most reliable exchanges.

Many networks allow you to transfer for only one commission. But not all cases are the same. Ethereum, for example, currently has some problems with its network which makes the commission too high.

Similarly, study the commissions for buying, selling, and withdrawing on the exchanges you are going to use and avoid unpleasant surprises.

Nowadays it seems that everyone is an expert in cryptocurrency and the amount of information is unlimited. We recommend that you keep up to date with the most important cryptocurrency news, using only reliable sources such as Cointelegraph or Coindesk.

Don’t stop exploring new ideas and applications as you may miss discovering interesting things and new opportunities.

Some examples are sectors within the cryptocurrency such as Decentralized Money (DeFi), Non-Functional Tokens (NFTs), Metaverse, or Blockchain Games.

When using cryptocurrencies, we are responsible for protecting our cryptocurrencies. Thus, avoid saving cryptocurrencies on the exchange and use your own wallet also for other extra security measures.

Investing in cryptocurrencies involves some risk, so it is important that you never invest an amount you do not want to lose.

And of course, before investing any amount, before studying, training, or failing, consult qualified staff who specialize in this type of investment.

Focus on potential fraud and scams. Stay away from overnight big money promises and rich-quick plans. Take all necessary precautions before choosing a project or platform where we are going to invest.

Originally published at https://blockchain101.famecoin.ai.