Cryptocurrency For Beginners
Joel Mark Harris
March 30, 2020
If you’ve been a sideline player, watching the cryptocurrency market, now may be the time to get more serious because cryptocurrency is rapidly maturing. And with COVID-19, stock prices have dropped drastically and along with that cryptocurrency prices have dropped significantly.
Compared to the existing fiat currency system, like the Canadian dollar, cryptocurrency is still in its infancy, but considering the rate at which crypto is quickly gaining more adopters, fiat currency suddenly doesn’t seem so far ahead of the game anymore.
Paper money printed out of thin air and mainly passed around electronically (via interac e-transfers or credit card payments for example) attempts to remain relevant in the digital world. It is akin to Charlie Chaplain on a big-wheel bicycle with a massive head start ahead of a modern Japanese superbike at full throttle.
Somewhere along the line the old ways will be left in the dust by the new. The question isn’t so much ‘when’, or even ‘why’ this will happen, but rather ‘how’. The question is how do we all get ahead of the curb?
What Is Different About Cryptocurrency?
For beginners to understand cryptocurrency, they must first understand fiat currency. In a nutshell, fiat currency is paper that people have agreed represents some value. It has no inherent value because it is backed by a government bank (supposedly based on certain economic factors).
The more closely someone studies the intricacies of fiat currency and its sketchy cousin, fractional-reserve banking, the less appealing it seems.
Now flash forward to the new millennium and, cryptocurrency suddenly offers a more tangible value. Why? Because each type of crypto has a maximum amount that can be created, and it will always be that value.
Unlike fiat currency, were its value is in constant fluctuations (due to exchange rates, supply and demand, political crisis, etc.).
In addition, how cryptocurrency is valued is very simple: If a cryptocurrency has a supply with little demand from traders and users, then the cryptocurrency’s value will drop.
Alternatively, if the supply of a particular cryptocurrency is limited and the demand is high, then the value of the coin will increase.
The Most Common Cryptocurrencies
There are countless cryptocurrencies with more being created each day. Here are some examples:
Bitcoin — The first cryptocurrency ever created and is designed to be a viable alternative to fiat currency.
Ethereum — This type of cryptocurrency is for smart contracts and was founded by Vitalik Buterin, designed to be an alternative to Bitcoin.
Ripple — Unlike most cryptocurrencies, it doesn’t use a Blockchain in order to reach a network-wide consensus for transactions. This makes it faster than other cryptocurrencies, but also more vulnerable to hackers.
Bitcoin Cash — A form of Bitcoin that allows more transactions to be processed than traditional bitcoin by having more storage.
Litecoin — It is designed to be a faster version of Bitcoin. In technical terms it’s very similar to Bitcoin.
How Do You Buy Cryptocurrency?
For beginners, choosing the right cryptocurrency exchange is important. With the increased popularity of cryptocurrency, it is much easier to buy and invest in them then it once was. There are sites like netcoins.ca that offer simple, fast, user-friendly means for all of us to get into the crypto market, regardless of our level of understanding when it comes to cryptocurrency
By setting up an account a user has their pick of which of the most popular and widely circulated cryptocurrencies to get into. From the ubiquitous Bitcoin, to its most popular rivals: Ethereum, Ripple, Litecoin, and Bitcoin Cash, are available for trade with just a few clicks.
Netcoins has an easy-to-use dashboard where you can easily deposit, withdraw and buy cryptocurrency. Unlike a lot of exchanges, you can reach them by phone, email or chat.
What Can You Do With Cryptocurrency?
There are two options: trade (like securities or commodities) or use it as currency in purchases.
As more online retailers and businesses adapt to crypto trade, fiat will become less convenient to use, especially since it will always involve dealing with a bank somewhere along the way in the exchange. And when there’s banks involved, there are fees involved.
Crypto, however, will be a direct transaction between you and the seller or buyer. Ultimately, if crypto establishes a mainstream status and directly competes with, or even replaces the fiat system, there are a lot of possibilities.
People will be able to trade between each other instantaneously without having to pay interest fees, or exchange rates, or experience delays in accessing or sending money. That control will belong in the hands of all of us.