Cryptocurrencies are basically just like any other currency—the U.S. dollar, the Japanese yen, or the euro—accept that they are housed entirely online. You cannot hold a Bitcoin, for example, in your hand. You can spend it and save it just like other currencies, but it can only be found as bits and pieces of code within your computer. For some, this is a terrifying idea. What if your computer crashes? What if someone hacks into your data and steals your money?
For those that worry about these things, there are a lot of satisfactory answers. In fact, one of the reasons why cryptocurrencies have seen such huge success recently is because a lot of these big questions have been efficiently dealt with. Here, we will talk about those things a bit, as well as give you a better answer about what a cryptocurrency is—and how to best get started with it.
The Bitcoin is the big name in cryptocurrencies right now, but it’s certainly not the only one out there. Ethereum and Litecoin are also catching on and becoming more frequently used. Odds are, many more will come and go in the next several years. For now, there are only a handful of widely used cryptocurrencies.
Cryptocurrencies have seen some growing pains. They have seen security disasters, money has been lost, and people have suffered because of this. However, many of these issues have been resolved. For example, if you follow the proper security steps, you will likely not have any issues. Is it 100 percent foolproof? Absolutely not. But neither is carrying around paper money in your wallet. There’s always a chance that you could be robbed or just drop something. The more careful you are, though, the less likely these things are to happen.
Cryptocurrency is effective only when you take the proper steps to keep your money safe. You wouldn’t walk down a busy street with a few $100 bills hanging out of your pocket, right? Just like that is a less than intelligent idea, you wouldn’t keep your Bitcoin hanging out in a Bitcoin wallet that wasn’t properly secured.
The blockchain does a lot toward keeping money secure. As more and more currencies are spent and change hands, the blockchain that encrypts all of this information becomes more and more complex. It’s always changing to keep your money safe.
There are many different cryptocurrency wallets out there. The one that you choose will be determined by what your purposes for using a cryptocurrency are, and how much you have. Some people only keep a couple hundred dollars worth at any one time, and having their cash in a mobile wallet is fine. This way they can access their cash while they’re on the go. Others need more security and should purchase an external hard drive so that their money is safe. Many external hard drives can be completely disconnected from the internet, and that makes them safe from hackers. Some people will even convert their cryptocurrency into a code and print that code out, so that only by inputting the code on paper can that currency be retrieved. You might use one or more of these features while keeping yourself safe.
Finally, be smart with your purchases. This is a new field, and a lot of scammers and hackers have seen this as an opportunity to take advantage of people. Keep your money secure, but also only spend it where you are confident. This way, you will drastically reduce your risk of falling prey to a scam.