All About Cryptocurrencies

Cryptocurrencies are virtual currencies that are not connected to a central bank and do not have a single administrator like a bank or a government.  In fact, cryptocurrencies are not government-issued.  They have fewer rules and regulations concerning how they are used.

Cryptocurrency is digital only. There’s no paper money form of cryptocurrency. When you own cryptocurrencies, you essentially own digital or virtual assets. These virtual currencies can be converted to cash or US dollars if you sell the currencies and transfer funds to your bank account.

Cryptocurrency is widely being accepted for online transactions, and can be used as payment in some brick and mortar locations as well. Bitcoin cash or Bitcoin (BTC) is the most commonly known cryptocurrency and was the first cryptocurrency to enter the market. Other virtual currencies are rising in popularity though too.

What is Cryptocurrency?

You can think of cryptocurrency as a type of digital currency. You cannot hold crypto tokens in your hand, but rather you keep them in a ledger system called a blockchain and in digital wallets for use during regular transactions.

  • It is not considered “foreign currency” anywhere in the world since there is not a central bank that controls it.
  • You can join one of the cryptocurrency exchanges with little to no experience and make huge money over time.
  • Peer-to-peer transactions are common and may or may not include transaction fees.

How Does Cryptocurrency Work?

Cryptocurrency works at different levels with miners, investors, and traders.

  • Miners use elaborate computer setups to “mine” the crypto. Mining is actually the action of creating a new blockchain and adding it to the existing ledger.
  • Mining takes extreme amounts of energy and may only yield a fairly small amount of crypto in return.
  • According to Forbes Advisor, the average crypto miner is paying back nearly 80% of what is generated to cover the cost of energy expended.
  • Investors and traders use digital currencies as they would any stock in the stock market, buying when prices are low and then selling for profit when the prices go up. Because of price volatility, there are always plenty of trades to happen.

What Are the 4 Types of Cryptocurrency? 

Cryptocurrency can be divided into 4 types each defined by its utility or how it is used. They are Currency, Asset, Object, and Joke.

  • Currency crypto is based on a token system of digital money and is one of the most common types of crypto. Most have their own token or crypto coins such as Bitcoin, ETH(Ethereum’s coin), and Sol (the coin used by Solana)
  • Asset crypto is valued by actual physical assets with tangible value such as the US dollar or gold.
  • Object crypto is created with a specific end goal in mind. This crypto is meant to solve a world problem with special funding from these transactions.
  • Joke coins or Meme coins were created based on memes and are among the riskiest types of crypto. Most are only around for a brief period before collapsing while others have gained in strength and value at a steady pace. The most famous of these are Dogecoin and Shiba Inu.

Is Crypto Real Money?

The best answer for this question is for the most part, yes. It is not “real” in terms of the ability to hold it in your hands or even see it. It is real in that you can buy things with it, sell or trade it, and do most of the things that you would do with traditional money.

El Salvador became the first country in the world to declare cryptocurrency as legal tender in June of 2021.

What is the Cheapest Cryptocurrency?

There are several types of cryptocurrency that are still on the low end in the market and can be bought for under a dollar. Some of the cheapest cryptos as of the date of this article’s publication include the following:

  • VeChain. Currently selling at $.09, ranked 32nd on the exchange
  • Dogecoin. The current price is $.18, ranked 12th
  • Cardano. The current price is $1.51, ranked 6th
  • Fantom. Selling at $2.27, ranked 33rd
  • Polygon. Selling at $2.65, ranked 14th
  • Decentraland. Selling at $3.67, ranked 42nd

Can Cryptocurrencies Be Converted to Cash?

Yes, there are ways to convert your cryptocurrencies to cash.

  • Sell your cryptocurrency for gift cards.
  • Create a Venmo account and use the cashback to crypto feature.
  • Use a third-party payment processor such as BitPay which is a debit card.

You can also use gift cards to buy cryptocurrency. In early 2022, Swagbucks will offer gift cards to buy free cryptocurrency as a new reward feature. Swagbucks members can earn rewards for taking online surveys, watching videos, playing games, trying freebies, using coupons, and other online activities.

How Do Beginners Invest in Bitcoins?

One of the easiest ways for a beginner to invest in Bitcoin, modestly, with the intention of learning more about Bitcoin and other funds on the cryptocurrency exchange. To learn while you earn, there are a number of apps that teach you about Bitcoin. You learn step-by-step in very user-friendly language.  As you learn about crypto and other virtual currencies, these apps will reward you with small amounts of crypto to reward you and encourage you to invest even more as you grow in knowledge and confidence.

  • Coinbase lets you take lessons on your own time. Join through the Swagbucks link and earn $30 cashback
  • BlockFi allows you to earn 1.5% back in Bitcoins for every purchase made with the BlockFi Rewards Visa Card. Create a BlockFi account, apply for the Visa rewards card and you can earn $35 cashback with Swagbucks
  • Investors should approach all Bitcoin transactions with caution because of the market’s volatility.

How Do I Buy Bitcoin?

There are 2 main ways to buy Bitcoin although other ways do exist. The most common way is to use a cryptocurrency market which is similar to a stock market in the way things are done. The second way is through PayPal.

Buying Bitcoin on an Exchange

To get started you should understand how the exchange works, whether it allows anonymous transactions or not, and what the transaction fees will be for each trade. From there:

  • Set up your account.
  • Connect to your payment option which can be your bank account, debit or credit card, or other third-party payment that is accepted by the exchange.
  • Place your first order.
  • Decide on storage within the market. If you have large amounts of crypto or you are planning on saving for a long time, you should move it to an off-site wallet that has higher levels of security.

Buying Bitcoin through PayPal

PayPal now allows you to buy Bitcoin and three other types of cryptocurrency directly on their platform. You can also pay for purchases with crypto from the PayPal platform.

  • Use “Checkout with Crypto” to pay from the PayPal platform.
  • You can use your PayPal balance to buy Bitcoin as well.

You can even earn free Cryptocurrency (like Bitcoin) on rewards apps. Swagbucks is one such reputable rewards app. Watch videos, take online surveys, shop online (cash back rebates), and complete other activities to earn free Bitcoin.

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Is Cryptocurrency Safe?

While cryptocurrency is widely considered to be safe, cryptocurrency is still an investment. Any investment can lose money and is subject to market volatility. Prices can fluctuate from one day to the next. There is also a risk that hackers may be able to hack their way into your digital wallet.

According to the experts at Motley Fool, investing in crypto assets does come with risks but also potentially extremely profitable. Cryptocurrency is a good investment if you want to gain direct exposure to the demand for digital currency. A safer but potentially less lucrative alternative would be to buy the stocks of companies with exposure to cryptocurrency like financial apps where cryptocurrency is offered but not the exclusive feature.

How Do I Cash Out My Bitcoins?

Cashing out Bitcoins can be done with the same process as buying them through an exchange.  You can also:

  • Sell your Bitcoins for gift cards.
  • Use a special Bitcoin ATM for the transaction.
  • Use the Bitpay debit card and exchange it for whatever currency you want.

How Many Bitcoins Are Left?

Bitcoin mining has reached about 90% of all available Bitcoin. Currently, around 2 million Bitcoins are left to be mined.

Who Owns the Most Bitcoin? 

Satoshi Nakamoto is rumored to have about 1.1 million in Bitcoin. Nakamoto developed Bitcoin in 2009.

How Much Does a Bitcoin Cost?

As of the time of this writing, one Bitcoin would cost $46,353.68. As the market changes quickly, it could have changed several times between the time this was written and when it was read.

Are Bitcoins a Good Investment?

Again, the answer is yes and no. If you are a new investor with limited knowledge about how the value of an asset can change without warning, this may not be the market for you. On the other hand, if you are using apps like Coinbase to earn crypto while learning more about it, you could make a nice sum over time.

Until more companies accept Bitcoin and other cryptocurrencies as legal tender, more conservative investors will shy away. And a good rule of thumb is to never invest more than you can afford to lose.

What is the Best Cryptocurrency to Invest in?

In general, the best cryptocurrency to invest in is the one that you can safely afford. There are dozens with new cryptocurrency being discussed all of the time. Here is a list of Bitcoin and other popular cryptocurrencies to potentially invest in:

  • Bitcoin (BTC)
  • Ethereum (ETH)
  • Solana (SOL)
  • Cardano (ADA)
  • Dogecoin(DOGE)
  • Yearn. Finance (YFI)
  • Polygon (MATIC)

Many seasoned cryptocurrency investors believe that Bitcoin is the easiest and safest cryptocurrency to invest in.

 

Can Cryptocurrencies Make You Rich?

Technically, yes they can make you rich if you can make large transactions or have the ability to stay on top of an ever-changing market. For the average person, you are lucky to get a good boost or return on investment if you exercise caution and monitor the market.

Most of the articles written on this subject rely on needing a time machine because they start with “If you had bought X amount of this on this date, you would have Y amount of money now.”

Final Thoughts on Cryptocurrencies

For many people, it has only been in recent years that they have paid any attention to the cryptocurrency market at all. Despite being around since 2009, most people ignored it or worse, mocked it as a passing fancy.

Investing can be a good way to diversify but keep in mind that there’s volatility as with any other investment. Seek investment advice from professionals, learn as much as you can before investing, and whenever possible, earn as you learn with apps like Coinbase.

Nothing in this article should be construed as financial advice. Consult a qualified investment advisor or other financial professional regarding your situation. Opinions expressed in this article as solely those of the author who recommends you seek professional advice before making any investment decisions.

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