Cryptocurrency: What is Bitcoin? How do you make money?


The idea of ​​digital money can be intimidating, but this guide helps break down what cryptocurrency is, how it’s kept safe, and how you can make money.

While it’s becoming more and more common, some people still have serious concerns about the craze sweeping through younger generations.

Roughly one in five young Australians already own Crypto and for those who don’t, we asked Finder cryptocurrency expert James Edwards to create this beginner’s guide.

Before you jump in and try to buy, sell, or own coins, you need to understand what it is, how it works, and why it’s valuable.

What is cryptocurrency?

In basic terms, cryptocurrency is a digital currency that works through a computer network. It does not depend on any central authority like a government or a bank to maintain it.

The most popular currency product, Bitcoin, is often described as an electronic combination of cash and gold. Which means it can be spent like cash, but also have a lot of value like gold.

Like all currencies, it is exchanged or used to purchase goods or services. It’s not just imagined or made out of thin air, Mr. Edwards explained.

“Bitcoin was the first currency built on a blockchain,” he told news.com.au.

How is cryptocurrency safe?

A blockchain works by keeping an unalterable record of transactions through a consensus between computers or nodes on the network. If a change is made with a particular element of the blockchain that does not match the other parts of the larger chain, it will not be allowed.

This has created unprecedented security measures for coins.

“Unlike the existing systems we have with banks or a person-to-person transaction, there is no one institution or person that has authority over the exchange on the blockchain. Instead, there are five thousand servers that have to agree with each other,” Edwards said.

Cryptocurrency is created through a process called mining, which involves using computer power to solve complicated mathematical problems that generate coins. You can also buy from brokers or other people.

In essence, by owning a cryptocurrency, you own a key that allows you to move a unit of measure record.

The most popular Crypto currencies

Bitcoin

This was the first crypto created in 2009 by Satoshi Nakamoto, which is widely believed to be a pseudonym for an individual or group of people who are still unknown. It is the most traded currency.

Ethereal

It has its blockchain platform with its cryptocurrency called Ether (ETH) or Ethereum. It is the second most popular after Bitcoin.

stable coin

These are a class of cryptocurrencies that attempt to offer price stability as they are backed by a reserve asset. These can be pegged to another type of cryptocurrency or things like the US dollar.

How do you buy cryptocurrency?

Cryptocurrency can be purchased on an exchange or from a broker. The two are pretty similar, except that on a trade you interact with other people in the market.

For beginners, it is recommended to use a broker as you are buying the currency at the market rate. You don’t need to worry about paying too much or too little.

If you’re buying through an exchange, you can set prices for what you want to buy. An example of that is that you could set a purchase price for a Bitcoin at $50,000; once the coin reaches that price, you will automatically buy it through the exchange.

Exchanges also allow you to sell coins in a similar way.

Mr. Edwards said that the easiest way to get your foot in the door with cryptocurrency is through Finder mobile app.

“It is designed for people to buy and store their coins. You can go into the app, buy the coins you want at market price, and keep them there,” he said.

“It’s an easy way to get started and can have long-term benefits.”

If you are going down the route of using an exchange to purchase coins, he recommended doing extensive research before purchasing any product.

“It’s really important to get your information from a trusted source, generally you shouldn’t get your information from an individual on YouTube, TikTok or Twitter. They normally have an agenda and if they ask you to buy something, it’s usually a red flag,” she said.

“Using a website like Finder is a great place to start. It is very objective, there are no recommendations. What we try to do is give the fundamental knowledge so that you can develop your own strategy and your own thoughts.”

finder recently analyzed a wide range of exchanges and found Crypto.com to be the best for beginners.

How do you make money with cryptocurrencies?

There is no single approach to making money with cryptocurrencies. Sometimes it is a highly volatile market.

However, the most common formula for making money, particularly with Bitcoin, is to buy and hold. This is buying when the price of the coin is low and selling it when the price is higher. This is usually a long-term investment.

Trading is the high-octane and sometimes high-risk way to earn cryptocurrencies. Traders analyze trading charts, study the market, assess external factors, and are ready to take risks.

They are normally done through these three different strategies.

change day –This is where you buy and sell in a single trading day. The main benefit of this is that you do not need to pay overnight financing charges on your position.

Coverage – In this strategy, traders strategically open trades so that a profit or loss on one position is offset by changes in the value of the other position.

Trend trading – This involves attempts to capture profits through analysis of an asset’s momentum in a particular direction.

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