Cryptocurrency 101

Cryptocurrency, sometimes referred to as crypto, digital money, or virtual currency, has been in the news lately thanks to the meteoric rise of Bitcoin. While its value has fluctuated wildly, it’s never been higher than it is today. For those who have heard about it but don’t quite understand how it works, we’ve put together this guide on cryptocurrency so you can be an expert before even buying your first coin.

The History of Money

Although some may argue that it doesn’t, the currency still plays a major role in our global economy. Just as important is its history—how did humans go from bartering to digital transactions? More importantly, what does all of this mean for Bitcoin and cryptocurrency?

The Rise of Digital Currency

Cryptocurrencies like Bitcoin and Ethereum are causing a revolution in digital payments. Even though most people still don’t know what cryptocurrency is, it’s growing fast! It’s a form of digital currency that can be created by anyone using software that solves mathematical problems. Cryptocurrencies work without needing any bank or central authority to process transactions or keep track of balances. Read on to learn more about cryptocurrencies, how they work, and how you can get involved in such a revolutionary new technology.

How Does Cryptocurrency Work?

Cryptocurrencies are a digital payment system, meaning that you can transfer money to anyone in real-time over a computer network. ... Cryptocurrencies work on a peer-to-peer system that doesn't require banks or any other financial institutions as an intermediary. This is in contrast to credit cards and PayPal, which work through central authorities, acting as middlemen between buyers and sellers.

Bitcoin - The Most Famous Name in Crypto

Bitcoin is one of many types of cryptocurrency. Cryptocurrencies are essentially digital currencies that are encrypted using cryptography and are not issued by a central bank or backed by a national government. Bitcoin, in particular, is decentralized—meaning there is no single entity that runs it or owns it. For more information on cryptocurrency and bitcoin specifically, read our guide to bitcoin basics.

Should I Invest?

Just like with any investment, you'll want to consider your financial goals when deciding whether or not cryptocurrency is a viable investment option for you. If your goal is to simply increase wealth as quickly as possible, buying cryptocurrencies could be a good fit; they're highly volatile and fluctuate greatly in value over short periods of time. Buying and selling cryptocurrencies on a daily basis could generate significant returns if done properly (and leveraged appropriately), but it also carries a higher degree of risk than more traditional long-term investments.

What Can I Buy With Crypto?

There are currently more than 1,000 cryptocurrencies available for use. While these digital currencies can be used to make purchases at select retailers or online stores (like Amazon), it's still a bit of a chore to spend them at your favorite place. For example, you can't just walk into Best Buy and pay for your purchase with bitcoin like you would with cash or credit. Although some new companies are finding ways to bridge that gap, cryptocurrency still faces an uphill battle—at least in terms of adoption. Until there's widespread acceptance by merchants and consumers alike, it's hard to view cryptocurrencies as anything more than a novelty...

How Can I Earn Crypto?

For most people, purchasing cryptocurrency with fiat money is too slow and complicated. There are a few other ways to earn digital currency. If you have a business that accepts or pays in crypto, there's a good chance you can use your exchange API keys to generate crypto payments and then cash them out right away on an exchange. Many freelance work websites accept crypto for jobs done, which can be another way to get it instantly. Lastly, there are some sites that offer small amounts of crypto for free just for signing up! Check out CoinWorker and Gyft if you're interested in getting some small gift cards and then cashing them out once they have value.