Cryptocurrency 101: Understanding the Basics

Cryptocurrencies are digital currencies created using blockchain technology. They are considered good options for diversifying investments.
Cryptocurrency 101: Understanding the Basics

Cryptocurrencies, also known as digital coins, are not physical money like the dollar or euro. They are only available in digital form and are traded, created, and transferred without the need for intermediaries. This allows for direct person-to-person transactions. The value of cryptocurrencies is determined by supply and demand and can be highly volatile. Due to their low correlation to other assets, they can be a good investment opportunity. However, it's important to understand that there is no guaranteed return when investing in cryptocurrencies. To acquire them, you can make a direct transaction or buy through a cryptocurrency exchange. It's important to study the market and understand how it works before investing

Understanding cryptocurrencies quickly and easily

Digital currency, global financial transformation, a new way of thinking of economics, the business of the future and other terms usually define cryptocurrencies, and they are all correct in some way. Bitcoin is widely used as an example or even considered the only existing cryptocurrency. That's because Bitcoin initiated not only the idea of ​​cryptocurrencies but a whole market of digital assets and it was the first created. In the section "cryptoassets" you can understand a little more about this.

For now, let's focus on understanding what cryptocurrencies are and how this type of crypto asset expands more and more. First, it is necessary to clarify that these are only digital assets. They are not printable nor do they have any physical representation, different from the Dollar, or Euro. Cryptocurrencies cannot be confused with virtual money either, as virtual money refers to the digital environment where currency is represented, and it includes all common currencies that we know, like the ones mentioned above that have a physical representation.

The most disruptive feature of cryptocurrencies is that they do not need an intermediary to be traded, generated, or transferred, which makes direct person-to-person transactions possible. Cryptocurrencies work from encryption technology with the blockchain, a large transaction log. The blockchain makes network changes unfeasible without being validated by blockchain consensus, which also makes duplicate transactions impossible (transferring cryptocurrencies and trying to use them again, also known as double spending).

Why are cryptocurrencies volatile?

Supply and demand determine a cryptocurrency’s valuation. This is subject to high volatility. What makes cryptocurrency prices skyrocket is worldwide recognition, choice as a form of investment, and overall usage for transactions and new applications. A Bitcoin, for example, cost US$29,000 in July 2021 and jumped to US$50,000 in September of the same year. A crypto's expansion, the positive or negative news and statements about it all directly influence its value. As an area that is still little explored but growing, cryptocurrencies are constantly targets of misinformation or even fear, as they offer a new, freer, and more uncomplicated digital and financial logic.

How to start using and investing in cryptocurrencies?

Due to constant cryptocurrency growth, cryptocurrencies have been a target for investment. Before investing the investor needs to understand that there are no guaranteed and established returns. Everything will depend on the asset's valuation. With cryptos, you should keep track of which ones match your investment objectives and have promissory qualities. It is necessary to study the market and understand at least a little about how it works, so you will know how to evaluate good opportunities.

To acquire cryptocurrency, you can make a direct transaction or buy them through a crypto broker, known as exchanges. With this kind of platform, you can buy crypto using your "conventional money" and also sell them within the exchange. The way you manage your cryptocurrencies or the possibilities to profit from them will depend on the exchange you choose.

With Digitra.com you follow your growth, trade your cryptos, and can practice staking – a way to make your cryptos available to work on the blockchain, which generates remuneration. Many use crypto as a payment form, since transactions are generally faster and cheaper, especially internationally.

Also, there are many products and services that can be paid for with cryptocurrencies, such as universities. In these cases, you can use your cryptos as a form of payment You will probably leave this session with new questions and curiosities about the crypto universe. So, continue your studies here at DG Fresh, as studying is essential for superior financial results. Learning never stops!