Since it has been a while since I’ve used my online trading knowledge, I thought of writing something related to it. When people talk about online trading, one of the first things that come to mind is cryptocurrencies (AKA crypto).
If you’ve ever heard people mention Bitcoin, Ethereum, or blockchain and felt completely lost, don’t worry babygirl, you’re not alone. Learning about cryptocurrencies can feel intimidating, but at its core, it’s just another way of moving and storing your money online.
Let me help you by sharing everything a complete beginner needs to know about cryptocurrency based on my knowledge (minus the jargon and crypto-bro preaching).
So what is cryptocurrency?
Cryptocurrency is digital money that exists online and isn’t controlled by banks or governments. Instead, it runs on a technology called blockchain, which is basically a public digital ledger that records transactions transparently and securely.
Bitcoin (or BTC for short), created in 2009, was the first cryptocurrency. Today, there are thousands of cryptocurrencies, each designed for different purposes, such as:
- Payments
- Smart contracts
- Gaming, or
- Digital art
Blockchain explained
In simpler terms, a blockchain is like a shared Google Sheet that anyone can view but no single person controls.
Each transaction is grouped into a “block”, verified by a network of computers, and permanently added to the chain. Once recorded, it’s extremely hard to change.
This is what makes crypto so secure. Instead of trusting a bank to say “yes, this transaction is real”, the system relies on networks of computers and cryptography. It’s less about blind trust, more about verification.
TL;DR it’s a chain of blocks, like the name suggests.
Cryptocurrency Hall of Fame
Some popular cryptocurrencies you may have heard may be:
- Bitcoin (BTC): The first and most popular cryptocurrency. In limited supply and designed to store value.
- Ether (ETH): Digital coins hosted on the Ethereum blockchain that’s usually used to power the blockchain and can also be used for payments across platforms that accept it.
- Stablecoins: Cryptocurrencies pegged to real-world currencies like the US dollar and gold, designed to be less volatile. Some examples are USDC and USDT, both of which are pegged to the US dollar (meaning 1 USD = 1 USDC and 1 USD = 1 USDT).
The many uses of cryptocurrencies
People usually use cryptocurrencies to:
- Send money globally without traditional financial institutions like banks
- Invest or trade
- Use decentralised finance (DeFi) apps
- Buy NFTs (non-fungible tokens) or digital assets
- Hedge against inflation
Are cryptocurrencies a scam?
Crypto itself isn’t a scam, but like most finance-related stuff, scams involving crypto do exist. Prices are volatile, which means they can rise and fall quickly. Beginner traders should start slow, do their own research, and never invest money you can’t afford to lose.
To be safe, here are a few tips to note when dealing with cryptocurrency:
- Use reputable exchanges, not just that ad you keep seeing on social media.
- Enable two-factor authentication (2FA) for your crypto transactions
- Learn about crypto wallets before moving large amounts so that you don’t make any mistakes (they’re difficult to reverse, remember?)
Cryptocurrency isn’t magic internet money, but rather, it’s a developing financial system. You don’t need to understand everything at once. Start with the basics, stay curious, and question hype. In my opinion, crypto rewards patience far more than impulsiveness.
P.S. This is based on my understanding of cryptocurrencies and may not be complete as it’s just the fundamentals. If you want to know more, I’d suggest going to verified and credible sources like Investopedia and Coinbase.