Are you a young investor interested in dipping a toe into crypto? We’ve got a quick guide to explain what it is and how to get started!
Cryptocurrency is for kids, too! You may have seen videos on TikTok, and ads on other social media platforms, about this super-interesting topic. You may even be wondering what it’s really all about. In this short article, you’ll learn what you need to know about what may possibly be the money of the future.
What is cryptocurrency?
Cryptocurrency is a digital form of money that is decentralized. This means there is no government entity that owns, governs, or makes rules for cryptocurrency. There is also no physical form of cryptocurrency, like a dollar bill or coin. Cryptocurrency only exists in virtual form, and it works much like regular money. You can buy and sell it, save it, and hope it grows in value. You can also use it to buy things, as long as the vendor accepts cryptocurrency as payment.
Who invented cryptocurrency?
There’s no real answer to this question. In October 2008, a person or group that called itself Satoshi Nakamoto let the public know it is working on a new form of digital currency called Bitcoin. However, no one knows, for sure, the actual identity of Satoshi Nakamoto.
How many cryptocurrencies are there?
The most famous cryptocurrency is also the original: Bitcoin. It was released in January 2009. Since then, developers have created several thousand other cryptocurrencies. However, there are only a few dozen, at most, that are recognized as a currency and an investment-worthy asset. These include Ethereum, Stellar, Solara, Cardano, and Dogecoin.
How does cryptocurrency work?
Most forms of cryptocurrency are created and controlled through a distributed ledger, or blockchain, which serves as a database for financial transactions. All information on crypto transactions are stored electronically in this blockchain. The blockchain lives on any computer that accesses it from around the world. This makes it super-secure.
New bitcoins, for example, are also created on this ledger through a process called mining. “Miners” solve complex mathematical problems, which validate other bitcoin transactions within the bitcoin network. This peer-validation makes bitcoin highly secure. For every block of transactions that is validated, the miner is rewarded with new bitcoins as well.
How much is cryptocurrency worth?
The value of each cryptocurrency is different, and also changes a lot over time. Bitcoin, for example, was worth only $0.0008 when it was first created, and $68,789.63 at its peak in November 2021.
Most financial experts agree that crypto is most valuable as an investment. The majority of cryptocurrencies cannot be used for purchases.
Can I buy cryptocurrency now?
It’s never too early to start investing! To purchase cryptocurrency as an investment, you’ll need to create a crypto wallet through a secure investment site, like Coinbase, to hold your cryptocurrency. You may need to be 18 years of age to do this on your own; if you are not yet 18, ask your parents for help. You’ll create a wallet, buy your crypto, and be well on your way to being the next crypto investor to make big money off the digital currency of the future!
You’re never too young to learn about cryptocurrency and to start thinking about investing. Use this guide to learn about the decentralized digital money, how it works, and what you need to know before investing.
You can also visit our FREE Personal Finance Program to learn more about how blockchain technology is used in crypto mining, trading cryptocurrencies, and NFTs.
All information presented on this page is for educational purposes only and doesn’t constitute tax, legal, or accounting advice. It is to be considered as general information, not recommendations. Please consult with an attorney or tax professional for guidance.