Understanding Digital Currency Before Investing
Before we start the first thing you have to know about cryptocurrency is that you have full control over your money.
The only limits to your actions are not knowing how to earn, how to protect, and what you can do with your cryptocurrency savings and investment.
Here are the basics and some quick advice for beginners to give you insight before you start investing.
How to Earn Crypto?
There are many ways to earn crypto.
You can try mining which is the job of helping the blockchain. Becoming a miner is expensive.
You have to invest in powerful hardware and pay for your monthly power bill.
Most miners prefer working together to make a ‘mining pool’ where each member adds their processing power to the group.
Each member gets a fraction of the total amount harvested equally to their contribution to the pool.
You can also be an avid trader whose goal is to buy and sell cryptos for profit.
To simplify, a trader tries to buy assets while they are cheap then sell them again when the price and demand begin to rise.
This does take skill and knowledge so you need to review a more thorough guide to all the cryptocurrencies.
Cryptos are not officially counted as payment for employees so most jobs won’t offer you Bitcoin for your services.
However, you can earn them from selling stuff online or taking odd jobs.
For example, there are items on Amazon with the phrase ‘I accept Bitcoin’ in the description.
This means you can contact the seller outside of the website to arrange a deal using Bitcoin instead of dollars.
How to Protect Your Savings?
The first thing that you should know before you even begin investing is finding ways to protect your crypto.
Decide on what kind of wallet to use.
There are many different kinds available right now but they can all be simplified into two categories: hot and cold wallets.
A software wallet (hot wallet) can be installed on your phone or computer and they are accessible through your chosen device.
They are great for newcomers and active traders because they are convenient and efficient.
However, they are always online, making them vulnerable to invasion.
A hardware wallet (cold wallet) is an electronic device.
Most of them look like pocket wifi routers or flash drives with a USB plug.
These can store your private keys which are codes needed to use your crypto.
Without this device, your saved assets can’t be moved.
You have to plug them into a computer or smartphone to use them.
You still need a hot wallet even if you have a cold wallet.
The software version serves as your key to interacting with an exchange and recipients.
This gives you two accounts: your cold wallet protects big amounts of crypto and the hot wallet keeps your budget for trading and investments.
What to Do with Crypto Savings?
You can simply keep your Crypto savings in your account.
Crypto like DASH and Tezos have proof-of-stake which gives the user priority simply by owning a large amount of it.
If the crypto you have has proof-of-work then you have to be active in the blockchain either as a miner or a trader.
Gaining priority in a network means you are also more likely to have an opportunity to earn or your votes get recognized.
There are many things you can do with crypto but most people think about what actions can yield a better return on investment.
It is difficult to pinpoint exactly what those are because the industry shifts from time to time.
Final Thoughts On Digital Currency Investing
I’ve been trying to learn about all things involving investing as it’s my weak spot.
For example, if you want to know if Crypto is allowed in Canada, it is but comes with rules.
Canada allows the use of digital currencies, including cryptocurrencies. However, cryptocurrencies are not considered legal tender in Canada. Canada’s tax laws and rules, including the Income Tax Act, also apply to cryptocurrency transactions. – Source
Each time that I educate myself about investing online I feel it’s important to talk to the professionals.
To stay ahead of the game, have a read of this thorough guide to all the cryptocurrencies.
Discussion: How did you go about educating yourself about crypto?
Leave me your comments below.