A Beginners Guide to Investing in Cryptocurrencies: A guide that covers the basics around digital currencies.
A Beginners Guide to Investing in Cryptocurrencies: A guide that covers the basics around digital currencies.
Last updated: 9/21/2018
Companies and individuals are increasingly considering initial coin offerings (ICOs) as a way to raise capital or participate in investment opportunities. Like any investment, these can carry risk. Get up to speed on ICOs and what they mean for investors with this video, as well as resources from FINRA and SEC. Also see our Investor Alerts, Investor Bulletins and podcast on ICOs, Token Offerings and Cryptocurrencies.
What is an ICO?
An ICO is a fundraising means in which a company attracts investors looking for the next big crypto score by releasing its own digital currency in exchange, typically, for bitcoin. An Initial Coin Offering is an event that usually extends over a period of one week or more and in which everyone is allowed to purchase newly issued tokens in exchange for established cryptocurrencies like Bitcoin (BTC) or Ether (ETH).**
A Beginners Guide to Investing in Cryptocurrencies: A guide that covers the basics around digital currencies.
Everyone who is familiar with cryptocurrencies has heard of Bitcoin, Ethereum and Litecoin but there are over 1,000 different cryptocoins. The market cap of all these different digital currencies combined is a staggering $500billion USD. This is why it is important for novices to understand what the fuss is about and what the risks and opportunities are.
The purpose of this guide is to explain the basics around investing in cryptocurrencies and how you can get involved in this exciting new market. I will briefly go over how cryptocurrency works on a technical level, how to buy and sell them as well as some of the specialised tools you need for trading. Although this guide does not go into detail about specific coins, I will touch on some of the more popular options out there like Bitcoin, Ethereum, Ripple and Litecoin as well as smaller projects that you should keep an eye on.
In order to understand cryptocurrencies we have to take a step back and look at what they are built on – blockchains. A blockchain is a distributed database that maintains a continuously growing list of ordered records called blocks. Each block contains a timestamp and a link to the previous block.
Investing in cryptocurrencies has become the new trend recently. You might have heard about Bitcoin and Ethereum, but there are hundreds of other digital currencies out there. This guide will help you learn everything you need to know to get started investing in cryptocurrencies.
What Is Cryptocurrency?
A cryptocurrency is a digital currency that uses cryptography as its means of security. Unlike traditional fiat currencies like US Dollars, cryptocurrencies are decentralized and not issued by governments or banks. They are also generally not backed by anything other than the strength of their network.
The first publicly known cryptocurrency was Bitcoin, which was released in 2009. Since then, hundreds of new cryptocurrencies have entered the market, each with its own set of features and purposes.
The majority of all cryptocurrencies rely on blockchain technology for their functionality. A blockchain is a distributed ledger that anyone can view and add to at any time. When a transaction occurs, it is added to the blockchain by the first node to see it, called a miner node. That transaction is then confirmed by other nodes on the network until it reaches consensus status and becomes final.
If you are a beginner investor looking to get into the world of cryptocurrencies, this guide is for you. Before we dive into how to invest in cryptocurrencies, it is important to understand what cryptocurrencies are.
What is a Cryptocurrency?
Cryptocurrencies are digital currencies that use cryptography to secure and verify transactions. The first cryptocurrency was Bitcoin which was created in 2009 and paved the way for many other cryptocurrencies. Today, there are over a thousand different cryptocurrencies with various functions, specifications and values.
How do Cryptocurrencies Work?
Cryptocurrencies run on the blockchain technology which allows them to be decentralized. This means that no one government or authority controls them. Instead, the people that participate in the network (i.e., miners) have control. Mining is the process by which transactions are verified and added to the public ledger (known as the blockchain). Miners are rewarded with cryptocurrency tokens each time they add a block of transactions to the blockchain. Because there is no centralized authority managing it, users can remain anonymous when making transactions with cryptocurrencies which makes them very attractive to criminals looking to launder money or finance illegal activities.
When investing in cryptocurrencies, there are a few different strategies you can use. The most popular strategy is to buy and hold. This is especially true for investors who have been in the game for years. However, new investors might want to consider other strategies.
The best way to get started is by using an easy-to-use platform that allows you to buy Bitcoin with Canadian dollars or US dollars directly from your bank account. Once you’re ready to invest more money into cryptocurrencies, there are many platforms that allow you to exchange one cryptocurrency for another.
If you are considering investing in cryptocurrencies, it may be best to treat your “investment” in the same way you would treat any other highly speculative venture. In other words, recognize that you run the risk of losing most of your investment, if not all of it. As stated earlier, a cryptocurrency has no intrinsic value apart from what a buyer is willing to pay for it at a point in time. This makes it very susceptible to huge price fluctuations, which in turn increases the risk of loss for an investor. Bitcoin, for example, plunged from $260 to about $130 within a six-hour period on April 11, 2013. If you cannot stomach that kind of volatility, look elsewhere for investments that are better suited to you. While opinion continues to be deeply divided about the merits of Bitcoin as an investment – supporters point to its limited supply and growing usage as value drivers, while detractors see it as just another speculative bubble – this is one debate that a conservative investor would do well to avoid.
Investing money into Bitcoin in any of its many guises is not for the risk-averse. Bitcoins are a rival to government currency and may be used for black market transactions, money laundering, illegal activities or tax evasion. As a result, governments may seek
Cryptocurrencies are a digital form of cash which are mostly traded over the internet. It’s a currency that is decentralised and can be used for making payments. The transactions are made through cryptography, which is the term from which it gets its name.
The fact that cryptocurrencies are not regulated by any central authority and the fact that it’s digital makes it difficult to track. The number of people using this currency has been rising every year and more people are turning towards it as an investment opportunity as well.
It was back in 2008 that Cryptocurrencies were invented and since then there have been many different currencies created. Over time, new coins have been added to the list on a regular basis and more people have been using it as a means of payment.
Even though most people still don’t know much about cryptocurrencies, more and more people have started to invest in them and they have realised the profits they could make out of it. It is also seen by most as an asset to invest in rather than money or cash, as it has immense potential to grow over time.