By Jerry Mooney
Cryptocurrency is a term that is bandied about a lot in the media and online, usually in relation to making some extra money. However, like most investment ventures going in blind without a clue is a bad idea. In fact, you need to get up to speed on a number of key areas before you consider cryptocurrency for your next investment, something you can do by reading the information below.
What it is?
Too many people answer this question with the term ‘Bitcoin.‘ Yes, this is an example of a cryptocurrency, the first in fact, but it doesn’t actually give you a lot of detail about what this virtual currency is or how it’s used.
In fact, a cryptocurrency is a method of payment that works in a decentralized way online. That means you can buy and use crypto without having to go to a bank. It is a relatively new way of paying for things and as such is more popular online than in the real world. Although some places are starting to accept such payments now. Something you can find out more about here.
How does it work?
Obviously, before you invest in crypto, you need to have a basic understanding of how it works. Despite all the hype, it is actually a fairly basic system made up of three parts.
The first party is the ledger which is like a virtual bank record where all the currency ownership information is kept. Then to use your currency, you need to take part in a transaction where some of the money that is listed against your account in the ledger is transferred to a vendor, for good or services and the like. To do this something called mining needs to happen, and this is when the information pertaining to the amount of currency you are using is confirmed as true. This is done via blockchains, using small parts of different computers all around the world to decrypt the information. The computers can be ones that are found home for personal use or larger setups that are used commercially.
What are the risks?
Security risks can put people off investing in cryptocurrency.
Before you get involved in any cryptocurrency, you also need to be aware that there are risks. One, in particular, is security, something that worries many people because of the virtual nature of the currency.
To get around this many people use a cryptocurrency hardware wallet, a gadget you can get for a great price with offers like Trezor discount code that can be used online. These are so useful because it means you can actually hold your currency offline and so protect it from the major security risks.
How can I make money from it?
At this point, you are probably wondering what all this has to do with making money, and it just seems to be an online way to pay for things.
However, this isn’t the case at all because you can, in fact, make money in three ways. These include trading cryptocurrencies, doing the actual mining process, or trading them like a normal currency in the exchange. Something you can read more about in detail here.