In cryptocurrency, you can buy goods and services and trade them for profit. Learn more about cryptocurrencies, the process of buying them, and how to protect yourself.
Cryptocurrency: What Is It?
Cryptocurrency or just “crypto” is a type of payment that does not require a central authority, such as a bank or government, for it to circulate. Cryptocurrencies, instead, uses cryptographic methods to ensure that they can be sold, bought and traded securely.
The cryptocurrency also used to purchase goods and services, as well as to invest in. Some decentralized financial networks also use cryptocurrency, where digital tokens used to facilitate transactions. Price fluctuations have historically been a feature of Bitcoin, the most popular cryptocurrency. Before falling back, it hit an all-time high of over $65,000 in 2021.
Where can I invest in cryptocurrencies?
It is possible to purchase some cryptocurrencies, such as Bitcoin, in U.S. dollars. However, other cryptocurrencies require payment in bitcoins or another cryptocurrency.
You’ll need an online app called a “wallet” to store your cryptocurrency.
The best way to purchase cryptocurrencies such as Bitcoin or Ethereum is to create an account on an exchange and use real money.
Can I buy cryptocurrencies from online brokers?
Some online brokers offer access to cryptocurrencies and stocks if you hold a traditional brokerage account. Robinhood, Webull, SoFi Active Investing, and TradeStation are online brokers reviewed by NerdWallet.
You should look for pure-play cryptocurrency exchanges if you want an exchange that operates only within the cryptocurrency realm. You won’t access stocks and bonds on these platforms, but cryptocurrencies are generally available, and wallet functionality is also more extensive.
What is the value of cryptocurrencies, and how many are there?
According to the market research website CoinMarketCap.com, more than 16,000 different cryptocurrencies are traded publicly. This number keeps growing. On Jan. 3, 2022, the value of all cryptocurrencies was about $2.2 trillion, down from an all-time high of more than $2.9 trillion weeks earlier.
The market capitalization of the best cryptocurrencies
CoinMarketCap, a cryptocurrency data and analytics provider, is the top 5 cryptocurrencies by market capitalization.
Bitcoin ($883.4 billion), Ethereum ($448.2 billion), Binance Coin ($86.9 billion), and Tether ($78.4 billion).
What makes cryptocurrencies popular?
Numerous reasons motivate people to invest in cryptocurrencies. Following are a few popular reasons:
- Those who support cryptocurrencies such as Bitcoin believe that these are the currencies of the future, and they are rushing to acquire them as soon as possible.
- Because central banks devalue money by inflating over time, cryptocurrency supporters like that cryptocurrency remove the central bank from managing the money supply.
- Cryptocurrencies supporters prefer cryptocurrencies because blockchain technology operates decentralized and can be more secure than traditional payment systems.
- It is popular among speculators since it is increasing in value, but their interest is not in its acceptance as a currency over the long term.