Cryptocurrency - Bitcoin and friends
Cryptocurrency and bitcoin in particular have been hot the last years because of their sharp in-and-decreases in price. Despite this people are still not sure what cryptocurrency actually is. Read below
What are Cryptocurrency?
What are cryptocurrency?
Cryptocurrency are digital currencies such as Bitcoin or Ethereum that are earned through mining or can be bought on exchanges. Exchanges are companies that provide a marketplace for buyers and sellers to buy and sell their cryptocurrency. Most cryptocurrency are paired to Bitcoin as this remains the most well-known cryptocurrency out there. Some major cryptocurrency like Bitcoin and Ethereum are often paired to USD as well.
It is also possible to buy a part of, for example, a bitcoin. The smallest number of bitcoin that can be bought is 0.00000001 bitcoin. These are kind of like Bitcoin “cents”, these are called Satoshi.
Trading of cryptocurrency took of the last few years, the rises in price attracted a lot of traders from traditional stock and forex markets as the double-digit % gains are usually not found there.
This means that there is a lot of risk involved in trading cryptocurrencies, but with these big price gains there are major opportunities for profit (or losses) if you know how to trade them.
All cryptocurrency are a speculative investment and carry a significant risk. There is in general a consensus that the technology: Blockchain, which a lot of cryptocurrency are based on, is technology that will be widely used. However, this doesn’t mean that most cryptocurrency will be used!
There are a lot of cryptocurrency projects out there, which all try to convince buyers that they’re “The new Bitcoin”. It is however a lot more likely that over 95% of these projects won’t succeed and will end just disappear in the coming years.
Trading cryptocurrency is for experienced traders who know what they’re doing. Even in traditional markets most of the traders lose money and there is only a small amount that are profitable.
Many of the projects are interesting and for the people who have “spare money” they won’t need anytime soon and are willing to risk losing it, investing in cryptocurrency can be very exciting.
Like regular trading it’s not for people who are looking to get rich quickly or people who want to invest their savings with low risk for a longer term.
Most exchanges don’t straight up sell cryptocurrency. Most of these exchanges are marketplaces for alternative cryptocurrencies and are traded for Bitcoin. If you want to buy the most well-known cryptocurrencies like Bitcoin, Ethereum and Litecoin. This can be done on exchanges like:
- Coinbase (Bitcoin, Ethereum, Litecoin, Bitcoin Cash)
- BTC-direct (Bitcoin, Ethereum, Litecoin, Bitcoin Cash, Ripple)
- Litebit (Same as above and more)
Once you created an account on one of these exchanges you’ll have to verify your account with identification. When verified you can buy your own cryptocurrency. On the above exchanges it is possible to buy a cryptocurrency and keep it in the wallet on that exchange.
In the example of Litebit, you can enter your amount and click on “Use LiteBit wallet” to send your bought cryptocurrency to a wallet on the LiteBit exchange.
Once bought your cryptocurrency here, you can keep these in the wallets on that specific platform. Or send it to other exchanges which are marketplaces for Cryptocurrencies and usually offer more altcoins.
Some of the most frequently used exchanges are:
When creating an account here, you’ll have to verify this account again with your identification. After this you go to wallets in the top navigational bar and click on the green dot and arrow in front of the cryptocurrency you want to receive from your other exchange.
You’ll get to a screen similar like below and click: “Create wallet” Which will be the big blue button which says Copy for me (as I already created one). After that Bittrex will create a wallet and show the screen below.
Copy the code and paste it into the receive address as shown in the previous LiteBit image.
You can also buy cryptocurrency on eToro. Here you won’t have to use the wallets or addresses. The downside to this is that your cryptocurrency can not leave the platform as you’re not buying the currency itself, but are betting on price changes on the eToro platform!