Cryptocurrency—or crypto—is all the rage in the investment world, but that doesn’t mean it’s easy to understand. Many people see friends or family members diving down the crypto rabbit hole, emerging days or weeks later with a new obsession, Internet acquaintances named Satoshi and a whole lot of jargon they can’t explain. And then there are the critics, who argue that crypto is nothing more than an exploitative Ponzi scheme with no real-world value.
Bitcoin, the most famous of all cryptocurrencies, launched in 2009. It’s built on a blockchain network that allows peer-to-peer transactions without a central authority. Instead of a bank, the blockchain has a system that verifies and records transactions, making it secure and immutable. Bitcoin’s value has soared since its early days, in part due to speculation by people who believe it will become the currency of choice in the future.
Some people use cryptocurrency to buy goods and services on websites that accept it, or they hold it as an investment with the hope that its price will go up. This is called “buying and selling.” A big part of why crypto is so popular is that it can be sent from one person to another almost instantly, for a relatively low cost and without the need to transfer funds through banks or other middlemen. This makes it especially useful for international payments or for people who want to avoid transaction fees associated with more traditional methods like wire transfers.
But it’s also important to remember that crypto isn’t regulated and doesn’t offer the same protections as registered securities, such as stocks or bonds. As a result, the prices of most cryptocurrencies are very volatile. This can make it risky for people who aren’t prepared to invest a significant amount of money for the long term.
The crypto community can seem strange to outsiders, with its exclusive club of high-earning white men and libertarians with dog-eared copies of Atlas Shrugged. But it’s surprisingly diverse, with right-wing Bitcoin maximalists who believe in crypto as the path to liberty from government tyranny; left-wing Ethereum fans who want to overthrow the big banks; and speculators who are just hoping to make a quick profit.
The best way to get into crypto is to join a bitcoin or other cryptocurrency exchange, which allows you to buy and sell coins. Some exchanges require you to sign up with your name and email address, but others let you create an account using only a public key (e.g., a wallet address) and your password. This makes it possible to keep your crypto assets private and protect against identity theft or fraud. In addition, some exchanges provide tools that allow you to manage your digital wallet on your computer or phone. It’s also worth examining a coin’s underlying technology, and its developers usually make white papers available to provide more detail on their goals and how the currency will work. It’s also important to pay attention to how widely the coin is being used, as this can be a good indicator of its health and potential for growth.