December 9, 2020

What are cryptocurrency? 

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Contents

  • 1 How many different cryptocurrencies exist?
  • 2 How did cryptocurrencies become so popular?
  • 3 Are all cryptocurrencies legal?
  • 4 How do you buy cryptocurrencies?
  • 5 Bitcoins
  • 6 Does one have to buy a whole coin?
  • 7 Is it safe to buy Bitcoin?

The easiest way to describe a cryptocurrency is to call it a digital currency that one can use as real money online. The majority of people trading with cryptocurrencies doesn’t do to buy clothes or other materialistic things online – they do it to earn a big profit. In time people who are interested in cryptocurrencies has a strong believe in that the currencies will be worth a fortune. Some even think that cryptocurrencies will replace fiat currencies.

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How many different cryptocurrencies exist?

According to CoinMarketCap.com there are around 6700 different cryptocurrencies on today’s market. In 18 December 2020, the total worth of all existing cryptocurrencies was over 645.7 billion US dollars. The currency that is worth per coin the most is Bitcoin.

These are the 10 most popular cryptocurrencies on today’s market:

  • Bitcoin
  • Ethereum
  • XRP
  • Tether
  • Litecoin
  • Bitcoin Cash
  • Chainlink
  • Cardano
  • Polkadot
  • Binance Coin

Read more about these different cryptocurrencies onthis site.

How did cryptocurrencies become so popular?

Cryptocurrencies became popular for various reasons. Why investors like the currencies are highly individual, but we have complied the four most common reasons:

  • Investors believe that the cryptocurrencies are the currency of the future. They buy Bitcoin to make a profit from it when the coin increases in its value. Some even think that cryptocurrencies someday will replace the traditional fiat currencies.
  • Some people like to invest in cryptocurrencies because the banks doesn’t have any power over it. The bank can´t decide over the value of the currency via inflation.
  • Cryptocurrencies often offers their users complete anonymity. This is one reason for why people like it so much. Anonymity can attract people and the idea of staying complete of the radar.
  • All cryptocurrencies are built by so called blockchains. These blockchains are one of the reasons for cryptocurrencies popularity. People like the decentralized process and recoding system. Some even say that the blockchain makes cryptocurrencies even more safe the fiat currencies.
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– Note: Fiat currency is a government-issued currency, such as for example U.S. dollars. 

Are all cryptocurrencies legal?

Yes, all cryptocurrencies are legal – to both buy and sell. But you may need to be aware of the laws in your country. In China for example all cryptocurrency is banned.

How do you buy cryptocurrencies?

You buy cryptocurrencies at different exchange brokers. There are many different brokers to choose from and it can feel a bit difficult at first. The most common sites to use for buying cryptocurrencies are:

  • Coinbase: This site is the one we would recommend for people to use.
  • Binance: Offers low rates when using other currencies.
  • Coinmama: The best site when it comes to quick transactions.
  • Robinhood: Very low costs.
  • Coinbase Pro: Only used by active traders.
  • Square Cash: Offers the best versatility.
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Bitcoins

Let´s talk a bit about the most popular cryptocurrency – Bitcoin.

Bitcoin got invented in 2008 by a person or a group of people who went by the name Satoshi Nakamoto. Until this day Satoshi Nakamoto is anonymous. Nakamoto published an article where accurate descriptions occurred for how Bitcoin would be created. 

How does it work when you buy a Bitcoin?

You start by choosing a site from where you want to buy Bitcoin from. On this site, you later create a digital wallet where you can store the coins that you buy. You buy the coins from traders who sells coins on the site. You can either pay the coin with other cryptocurrencies or regular fiat currencies.

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You can also choose to buy cryptocurrencies by using a peer-to-peer system. A peer-to-peer system allows for private people to buy and sell to each other.

Does one have to buy a whole coin?

No, you do not need to buy a whole coin. One can actually buy as little as 0.00000001 of a coin.

Is it safe to buy Bitcoin?

To buy Bitcoin is definitely safe as long as you use a respected and trustworthy platform. Before you buy Bitcoin from a platform you should always do some research of the platform. Read many reviews before you start an account. All the platform we have listed earlier in the text are trusted platform to use.

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When talking about if Bitcoin is a safe investment that question is a bit trickier to answer. Bitcoin have a more frequent value fluctuate that other fiat currencies. This means that the worth of a coin can go up and down very fast. It is important to know that there is no insurance or guarantee when investing in Bitcoin. This means that if you lose a lot of money, there is not that much that you can do about it.

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