11 November 2021
Nowadays, cryptocurrency is being discussed and written about a lot all over the news and social media. As a result, more and more people decide to learn about cryptocurrencies and invest in them. But, while some people are avidly investing in cryptocurrencies, others still do not fully understand them. If you want to know what cryptocurrency is, how to invest in it, and what terms like fiat to crypto mean, this article is for you.
Let’s start by explaining what cryptocurrency is. The term “cryptocurrency” indicates that we are dealing with cryptography and currencies. Cryptocurrencies are digital currencies that do not exist in the physical form. In other words, cryptocurrencies are virtual money created and stored electronically. It can be exchanged for goods, services, or other crypto or fiat currencies (fiat currencies are traditional currencies, such as dollars, euros, or pounds). There are two main cryptocurrency transactions: crypto-to-crypto and fiat to crypto. Crypto-to-crypto means exchanging one cryptocurrency for another, while fiat to crypto means exchanging a fiat currency, such as dollars or euros, for a specific cryptocurrency, such as a Bitcoin or Litecoin.
Cryptocurrencies are based on a decentralized technology called the blockchain. Blockchain is a public register of transactions within the network of a given cryptocurrency spread across many computers that manage and record transactions. The transactions are concluded, verified, and encrypted using cryptography (complex mathematical calculations).
One of the main differences between cryptocurrencies and physical currencies is the involvement of banks. The mission of the central bank is to stabilize the value of the national currency. However, when it comes to cryptocurrency, no bank is involved. This is because blockchain technology works in such as way that it prevents counterfeiting both the cryptocurrencies and the transactions, so there is no need for an intermediary.
There are a few reasons why you should start investing in cryptocurrency sooner than later.
Investing in cryptocurrency can be risky, but at the same time, it can allow you to make a big profit. For example, when Bitcoin first appeared in 2011, one Bitcoin was worth less than $1. Now, in 2021, it is worth over $60,000 and increasing. Similarly, many cryptocurrencies that appeared over the years started very low and significantly increased in value over a longer period of time. This proves that while the risk of losing your cryptocurrency investment is real, the potential for huge profits is even bigger.
Most of the time, investing in cryptocurrency turns out to be more beneficial long-term. By investing in crypto now, you can end up creating significant savings for your future, such as your retirement, a much-needed sabbatical or an emergency crisis.
With the continuous advancement of technology, more and more things are now done digitally. While paying for goods and services in cryptocurrency is already possible, it is only a question of time until digital money becomes a widely popular payment method worldwide.
So, how do you enter the world of cryptocurrencies? There are several ways to do it. You can buy them through a cryptocurrency broker, a Bitcoin ATM, or a fiat to crypto exchange. The latter is the most popular and the easiest way to get started with investing in cryptocurrency.
The process of buying your first cryptocurrency is very straightforward. The first transaction that you will complete as a new trader is a fiat to crypto transaction. This essentially means that you will exchange your currency, such as dollars or euros, for a cryptocurrency of your choice. The first step to do that is to choose the right fiat to crypto exchange and open your trading account. This is the same process that you would go through to open a bank account at the bank of your choice. The most popular fiat to crypto exchange is Coinbase.
After your trading account is set up, you will need to transfer some money into your digital wallet. Then, you will be able to exchange that money for the cryptocurrency of your choice. This is precisely what a fiat to crypto transaction is.
Before completing your first fiat to crypto transaction, there are a few things that you need to consider.
Before investing in cryptocurrency, gather as much information as possible about the crypto market in general and the specific cryptocurrencies you are planning to invest in. Many new investors ignore the fact that multiple factors influence the price fluctuations of cryptocurrencies. So do your research and keep yourself well-informed.
When it comes to cryptocurrency, prices change in real-time, so it is essential to monitor price fluctuations closely. Unlike other investments, such as real estate or gold, cryptocurrency has proven that it can generate high price drops and increases in a short time. Therefore, when completing your first fiat to crypto transaction, make sure to invest just the right amount. Do not invest more than you are prepared to lose. If you lose a lot of money on the first try, it will discourage you from investing further.
Many beginner investors fall into the trap of the fear of missing out. Just because all your friends are investing in this new, trending cryptocurrency doesn’t mean it is a good investment. Remember that there is risk involved with every fiat to crypto transaction. Do your research and take time to analyze the profit and risk potential.
If you are new to the cryptocurrency world and looking to start investing in crypto, NextHash has got you covered! NextHash is a fully regulated fiat to crypto exchange where you can buy and sell different crypto assets. So, if you’re planning on investing in Bitcoin, Ethereum, or other altcoins, you can do it with NextHash effectively and securely. In addition, NextHash fiat to crypto exchange offers the most competitive and reasonable fees on the crypto market. Click here to get started or contact us!