How to get started with cryptocurrencies

By Mark Myerson on Jan 27, 2018, 9:00 am EST under Tech News

Thanks to a remarkable rise in value, cryptocurrencies have been making the headlines in recent months. We decided to look at the opportunities — and potential pitfalls — of this new technology.

How to get started with cryptocurrencies

Cryptocurrencies are becoming a popular way to do business around the world. Switzerland recently became the latest country to embrace the technology.
Smaller cryptocurrencies are likely to dazzle this year. Look out for dock.io, Gladius, and more.
Wall Street’s top regulator, the Securities and Exchange Commission, recently detailed the biggest risks of crypto investing.

Most financial markets have their ups and downs. But cryptocurrencies have seen some remarkable growth in the past year. As investors piled in like speculators in the gold rush, many of us were left scratching our heads. What exactly is a cryptocurrency? And how do I buy some? To help you get started, we have put together this helpful guide.

The Bitcoin revolution

What are cryptocurrencies?

The technical definition of a cryptocurrency is a decentralized method of exchanging value by digital means. In more straightforward terms, it’s a currency with no bills or physical coins — only digital codes.

The decentralized network

Most of these digital currencies are not controlled by any individual or company. Instead, a network of computers around the world processes transactions in exchange for a small fee. The system is anonymous, secure, and almost impossible to take down.

[tweet_box]To help you get started with cryptocurrencies, we have put together this helpful guide[/tweet_box]

Bitcoin is the most famous and popular cryptocurrency. However, there are now hundreds of other cryptocurrencies, known as “altcoins.”

Top exchanges

Getting your hands on some digital money is actually very easy. Coinbase is a great app for beginners, allowing you to exchange your home currency for four different cryptocurrencies. If you want to trade more seriously, try one of these exchanges:

GDAX — the pro version of Coinbase
Bitstamp — instant buy/sell, good reputation
Binance — most popular, crypto-to-crypto only

Investopedia has a nice roundup of exchanges here.

Security is a top priority

Secure storage

If you plan to hold on to your virtual coins for any length of time, it makes sense to store them in a wallet.

No, we’re not talking about a classic leather bifold here. A cryptocurrency wallet is an app that acts like a digital safe. Some operate locally on your computer, while others offer online access.

Although web wallets are convenient, they are vulnerable to hackers. A more secure option is to store your crypto cash on an offline drive or a dedicated hardware wallet. Check out the HooFoo Bitcoin wallet and the Ledger Nano S.

Introducing ICOs

Many cryptocurrencies were originally set up as an alternative to mainstream finance. The same still applies to this day, but these digital currencies have become more than just money.

It’s not just money (Credit: Davidstankiewicz / Wikimedia Commons)

Many startups are now raising funds through ICOs, or initial coin offerings. Rather than offering equity, these companies present investors with cryptocurrency rewards. Telegram, the messaging app, recently announced one of the biggest ICOs yet.

Smart investing

Nowadays, Bitcoin and its rivals also make up a class of investments. This has pushed their value beyond that of any state-backed currency.

There’s money to be made

In fact, many people who bought Bitcoin prior to 2017 are now millionaires. Similarly, the value of Ripple — a fairly new digital currency — shot up by 1000% in December alone.

Of course, such runs cannot last forever. The start of 2018 has seen the value of every major cryptocurrency drop against nation-state currencies. However, many industry experts believe this is a temporary correction rather than a bubble bursting. That said, the crypto markets have always been and will continue to be very volatile.

Cryptocurrencies are here to stay

Here’s a word from Gadget Flow CEO, Evan:

Cryptos will become even more popular in 2018. Personally, I think that it’s in our future but the tech behind it is still far away from becoming mainstream. People are monetizing simply on the popularity of cryptocurrency. You can only imagine what will happen as soon as they become useful as well.

The final word

Cryptocurrencies are destined to be around for years to come. But the technology is still new, and regulators are playing catch-up. Investors can make a fast buck or lose a lot of money. If you plan to buy in to the crypto craze, always play with money you can afford to lose.