Cryptocurrency Trading Starter Guide
2024-09-30

PART 1

INTRODUCTION

 What are Cryptocurrencies? 

Cryptocurrencies are based on the fundamental idea of being decentralized digital money, created for use on the Internet. Bitcoin, introduced in 2008, was the pioneer in this field and remains the largest, most influential, and well-known of all. Since then, in just over a decade, Bitcoin and other cryptocurrencies like Ethereum have emerged as digital alternatives to government-issued money.

The most popular cryptocurrencies by market capitalization include Bitcoin, Ethereum, Tether (a stablecoin), and Solana. There are also others like Doge, Toncoin (from Telegram), and Chainlink, which are quite well-known. Some of these cryptocurrencies function similarly to Bitcoin, while others are based on different technologies or have additional features that allow them to do more than just transfer value.

Cryptocurrencies enable the transfer of value over the Internet without requiring the involvement of intermediaries like banks or payment processors. This facilitates nearly instant value transfers worldwide, at any time of the day, seven days a week, and with very low costs.

Most cryptocurrencies are not issued or controlled by governments or central entities. Instead, they are managed by peer-to-peer computer networks that operate using free and open-source software, allowing virtually anyone who wants to participate to do so.

If there’s no bank or government involved, how is the security of cryptocurrencies ensured? Security is achieved through a technology known as blockchain.

A cryptocurrency's blockchain is similar to a bank’s ledger or balance sheet. Each cryptocurrency has its own blockchain, which serves as a record where all transactions made with that currency are verified and continuously updated.

 Why are Cryptocurrencies Considered the Future of Finance? 

Cryptocurrencies are the first real alternative that challenges the traditional banking system, offering notable advantages that position them above traditional payment methods and existing forms of investment. They can be seen as "Money 2.0," a new type of cash born on the Internet, giving them the potential to become the fastest, most accessible, economical, secure, and global means of exchanging value the world has ever seen.

Cryptocurrencies can be used to purchase goods and services or as an investment option. Unlike traditional currencies, they cannot be manipulated by a central authority since no such entity exists. Regardless of what happens with a government, your cryptocurrencies will remain protected and secure.

Digital currencies provide equal access, regardless of a person's country of origin or residence. As long as you have a smartphone or a device with an Internet connection, you can access cryptocurrencies just like anyone else.

Cryptocurrencies offer unique opportunities to expand people's economic freedom worldwide. Without physical borders, digital currencies facilitate free trade, even in countries where the government strictly controls its citizens' finances. In regions where inflation is a significant challenge, cryptocurrencies can serve as a viable alternative to unstable fiat currencies for saving or making transactions.

 Why Invest in Cryptocurrencies? 

You can buy both small and large amounts of cryptocurrencies since it’s possible to purchase fractions of them. For example, you can buy Bitcoin with any amount, such as $1, $25, or $50.

Unlike stocks or bonds, cryptocurrencies can be easily transferred to anyone or used to pay for goods and services in just seconds or minutes.

Millions of people include Bitcoin and other digital currencies in their investment portfolios.

Creating a secure account only takes a few minutes, and you can buy cryptocurrencies using a debit card or through a bank account.

Cryptocurrencies' high volatility means their prices can change abruptly, providing traders with the opportunity to take advantage of these price movements to make profits.

24/7 Market: Unlike traditional stock markets, cryptocurrency markets are always open, allowing traders to operate at any time of the day or night.

 What is a Stablecoin? 

Examples of Stablecoins:

USDC (USD Coin)
USDT (USD Tether)
PYUSD (PayPal's Stablecoin)
DAI
USDD

These are examples of price-stable cryptocurrencies known as stablecoins. You can think of these assets as "crypto dollars" because they are designed to reduce volatility and increase reliability. Stablecoins combine some of the best advantages of traditional cryptocurrencies, such as seamless global transactions, security, and privacy, with the valuable stability offered by fiat currencies.

These cryptocurrencies achieve this by linking their value to an external element, typically a fiat currency like the US dollar, a tangible asset such as gold, or the Euro.

This makes their value less likely to experience drastic fluctuations from one day to the next. This stability can improve their usefulness as a currency for daily transactions, as both buyers and merchants can trust that the value of transactions will remain relatively constant over more extended periods.

Additionally, they can serve as a safe and consistent way to save money, similar to a traditional savings account.

Part 2 will be published tomorrow

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