Cryptocurrency: An Easy Peasy Guide to Digital Currency
March 29, 2022
Technology plays an important role in the world of technology. Every financial service provider or broker strives to provide the best security to their customers. Because wherever money is involved, there is a high chance of being scammed or phished. Moreover, due to the recent global pandemic, the rate of online crime has increased in the past year.
A study revealed that 90,000 people become victims of cyber-attack every month in the US. This statistic is scary, considering the US is one of the top countries with the best online security in the world.
As the financial world moves online, it is highly necessary to secure the mode of transaction and assets. As most physical cash and assets are stored in the home, banks, or business, it is subject to robbery, and your assets are gone. There is no turning back. Looking at these problems, cryptocurrency came as a solution.
What is cryptocurrency?
Cryptocurrency is a digital asset or a digital model of transaction that facilitates encrypted data transfer. Unlike banks and other institutions, they do not have a centralized regulating authority. Rather it’s decentralized in several parts.
It promotes peer-to-peer lending, which eliminates the regulator in between and allows two people to send encrypted data to each other.
The cryptocurrency uses a blockchain facility for a safe and secure transaction. Cryptocurrency is stored in digital wallets, and similar to stocks and bonds, these digital assets grow or shrink in value depending on the performance of the market.
A wallet has a virtual address assigned to it to make the transfer of cryptos easy among peers. Bitcoin was the first cryptocurrency released in 2009. In the earlier times, it was valued at $50 per coin, and currently, the price of one bitcoin is over $45000.
What is blockchain?
Blockchain is a system that records information. The specialty of blockchain is that it is extremely difficult to change, hack or cheat the system. This secures digital funds and makes it easy for people to transfer cryptos in the blockchain. A blockchain system is still an emerging technology set to revolutionize the way people make a transaction.
How do Crypto works?
The process of creating a cryptocurrency is called mining. Mining crypto is an extremely difficult task that involves using supercomputers to solve complex mathematical problems to create a single coin. Normal people can buy coins from crypto brokers or people and store them in crypto wallets.
How to buy a Cryptocurrency?
Buying a cryptocurrency is a simple task. You can even do it without any help. Nowadays, many apps and websites allow you to buy and sell cryptocurrencies easily.
Signup with a platform
- The first thing is to signup with a crypto broker. It is easy to create an account with them.
- Simply visit their website and signup by providing your information or connecting your Google account.
Verify your account
- Verify your email address and phone number. It will help you keep your account secure from online fraud and scams.
- Moreover, it also acts as proof of who you say you are and makes you credible in the eyes of the platform you are using for trading coins.
Fund your wallet
- After you verify, fund your online wallet. This will vary depending on the platform you are choosing to buy coins.
- Some platforms have wallet facilities where you need to add funds to your wallet first then purchase coins. Whereas some platforms directly connect you with a peer and purchase coins from them, this type is limited to some applications.
- Most of the coin exchange applications ask you to fund your wallet.
- Now all that is left is to buy coins. Check the coin market, choose the coin you want to purchase, enter the number of coins you want, and confirm the buy order.
- Here you have to understand, if you want to purchase coins worth $50 and deposit the same in your wallet, the cost for the coins may not be worth exactly $50.
- For example, if you want to purchase a coin of value $9 and choose a quantity of 5. The total cost will be $45, and you will still have the remaining $5 in your wallet.
Common scams in crypto
Cryptocurrency is still an unknown thing for many people, and because of that, many scammers take advantage of this and target beginners starting with crypto. The best way to avoid being scammed is to learn how crypto works. But from the information point of view, here are the most common crypto scams in the market.
- I don’t know if there are any professional traders out there who provide such services, but one of the most common things you will find people say is that they will generate a high-income return for you quickly.
- For example, invest $50 and get a $500 return with Bitcoin mining. Unfortunately, many people fall victim to these scams because they are new in the crypto market, did not learn about crypto, or have wrong information about cryptocurrency and its functioning.
- So, it is easy to convince them by spurting some fancy crypto words and making the amount transferred to their wallet address.
- Have you seen emails that say, “Your wallet in XYZ will be deactivated in the next 2 days. To keep your wallet active, make a payment of a certain amount. Unfortunately, these emails trigger a sense of fear, and new inexperienced people make the mistake of clicking the email and falling into their trap.
- Due to the high amount of such spammy activities crypto market has a bad reputation in the market.
How not to fall victim to these crimes
These crimes are easy to spot once you get into the market. However, it is also not practical to think that you will never get spammed. One important thing to understand is that the coin market works the same as the stock market. So, there is only a small chance a coin will give you a return of more than 50% in a short time and no chance of giving a return of 300% like spammers show.
Cryptocurrency is an easy and highly volatile market. If you are getting into crypto, make sure you trade with reliable sources using the best tools and indicators.