A cryptocurrency is a form of virtual currency that provides a digital medium for doing the transactions. It’s underlying technology, blockchain, is the ever-growing group of immutable blocks of data also called as records that are secured by some form of cryptography, i.e. “chain”. Cryptocurrency provides a decentralized platform to its users, allowing the users to have full control over their funds without relying on any other third party or central entity that can be a bank or other financial institution. This article will guide you on how to get started with cryptocurrency.
Before getting started, you need to know that cryptocurrencies like Bitcoin and Ethereum have given immense profits at the beginning, which has gained the interest of many tech-investors. They are also showing very much interest in bitcoin mining, due to its popularity. Although investing in cryptocurrencies can be risky, as it is still a new technology and is highly volatile, an affordable investment can be more beneficial for the investor.
Getting Started With Cryptocurrency
1 First, Get A Cryptocurrency Wallet
The cryptocurrency wallet acts as an account of any bank. Technically speaking, it is a software program that allows you to store, send and receive cryptocurrencies. It is also used to track your ownership by blockchain. The wallet itself is stored in the blockchain and is maintained decentrally as a public ledger. There are private and public keys in the cryptocurrency wallet.
The public key is used to facilitate the transactions and allows you to receive cryptocurrency. It is also referred to as an address in the blockchain.
It is the level of access to your wallet for doing the transactions. They are the passwords created using some encryption algorithm and should not be shared with anyone.
2 Choosing a cryptocurrency wallet
Three types of wallets are available.
1) Local Wallets
These are the locally created wallets, on a computer. For example, “Bitcoin Core” software that can act as a Bitcoin wallet. This wallet is not suitable for beginners, as it requires a lot of space for storing the wallet.
2) Owned Wallets
Owned wallets are the cryptocurrency wallets or the core software that is running on a server. Although it is available in a different blockchain access point, it still gives full ownership, i.e. private key. Owned wallets are generally lightweight than local wallets. They are the easiest to use and are the most secure.
3) Exchange Wallets
Cryptocurrency exchanges hold very much importance in the market. The users must be cautious while choosing the wallets due to the insecurity that lies within the cryptocurrency exchanges. You can do some analysis of these cryptocurrency exchanges and then select the suitable one.
3 How To Get Your First Cryptocurrency
Owned wallets allow you to purchase cryptocurrency with the help of any credit card or debit card in the cryptocurrency application. Another approach would be to find some cryptocurrency exchange and exchange traditional currency with cryptocurrency.
4 Activate Two-Factor Authentication
It is the most used security feature for all types of cryptocurrency accounts. Everything must be secured with blockchain, from cryptocurrency exchange to your email.
The two-factor authentication pairs your cryptocurrency account with the smartphone. It creates a unique password that changes itself in a minute. This code is required at login time and if the system detects that your password is seen it changes the code in a minute.
In this guide on how to get started with cryptocurrency, we have seen some of the basic things that help you to deal with cryptocurrency. You can either use owned wallets or go to some popular cryptocurrency exchange where the traditional currency is exchanged with cryptocurrency. Also, you can select the most suitable wallet by analyzing the risks involved. Cryptocurrency has immense potential to change the world as it provides a secure way of doing transactions.