Crypto is the booming new market for digital assets that operate on blockchains. It is a relatively unregulated industry with a lot of experimentation going on, and some people have made a lot of money investing in it.
Bitcoin, the first cryptocurrency, is still the most popular. It was created in 2009 by Satoshi Nakamoto, a pseudonym for an unknown person or group of people. Other popular cryptocurrencies include Ethereum, Bitcoin Cash, and Litecoin.
The list of goods and services you can buy with crypto grows every day. From e-commerce purchases to car dealerships, some major companies now accept it as payment. You can also use it to purchase real estate and even flights.
A big benefit of crypto is that it allows you to transfer money quickly and cheaply, both locally and internationally. It can be done 24/7 and doesn’t require the approval of a bank or other centralized authority. It is a great way to give financial freedom to the 7 billion or so unbanked adults worldwide who can’t get traditional accounts.
It is easy to set up a crypto account by linking your bank account, authorizing a wire transfer or making a payment with a credit or debit card. You then deposit the funds into a wallet, which is where you store your cryptocurrency. Depending on the broker or exchange, you may not have control over your private keys, and they are often stored on a central server. These are known as custodial wallets or hosted wallets. This means that if the business goes out of business, your crypto is likely lost forever. Effective security is critical.
You can choose to store your crypto yourself, but you need a secure computer and software to do it. You can also use a hardware wallet, which are devices that are designed to be secured by a combination of encryption, passwords and physical access controls. There are also exchanges that offer custody services, where they keep your assets in a wallet on their servers, but you cannot access the private keys.
Cryptocurrency prices are volatile, and you should only invest in it if you understand how it works and have researched it carefully. Scammers are out to take advantage of the crypto hype, and you should only invest with reputable investment managers or advisors. Before you invest, search online for the cryptocurrency name and words like “review,” “scam” or “complaint” to see what others are saying.
It’s important to note that cryptocurrencies are not insured or guaranteed by any third party, like banks or governments. This means that they are prone to theft and hacking, and losses can be significant. In some cases, stolen tokens can be reclaimed by contacting the exchange or wallet where they were stolen. But this is not always possible, and you should have a plan in place to protect your investments.