What are cryptocurrencies?

There are many different currencies, such as the British pound, the euro, the American dollar etc. For the last few years there have been not only physical (tangible) coins, but also digital coins. These coins are also called cryptocurrencies.

What is a cryptocurrency?

A cryptocurrency is a digital currency. This currency is not issued by a bank, but is completely separate from the many financial institutions and the various governments. Cryptocurrency is based on cryptography, or a combination of technical codes. The money is not tangible, but is stored in a virtual wallet. You can therefore only spend this money online.

The best known cryptocurrency is Bitcoin. This coin was introduced a few years ago and has become very valuable. This is because the demand for cryptocurrencies has increased explosively in recent years.

The history of cryptocurrencies

The financial crisis broke out in 2008. Shortly after, Satoshi Nakamoto (possibly an alias) published the document 'Bitcoin: A Peer-to-Peer Electronic Cash System'. The document explains the Bitcoin's invention: a peer-to-peer digital network for mutual payments. The main starting point of this network: there are no banks and governments between.

At first the Bitcoin was therefore not a digital currency, but a system to transfer money to other parties without the intervention of a bank or government. Eventually it evolved from a payment network to a digital currency. Since the creation of the Bitcoin, many more crypto coins have been launched, including the Ethereum, the Ripple and the Litecoin.

What are cryptocurrencies

Buying cryptocurrencies

There are several ways to obtain crypto coins. First, you can buy these coins. This can be done directly at the seller, but there are also platforms that sell Bitcoins.

If you do not want to spend money on your digital coins, you can also 'mine' them yourself. This means that you put your computer to work to 'make' coins for you. Your computer writes certain codes in a special computer program and in this way you get Bitcoins. This of course takes longer than buying crypto coins.

Investing in cryptocurrencies

Some people buy crypto coins to pay with these coins, but most people invest in cryptocurrencies to make a profit. If you buy your crypto coins when they have a low value and sell the coins when the value is very high, then you can make a lot of profit.

The first people who invested in the Bitcoin paid little money to do so. Because the Bitcoin is now extremely valuable, these people have become millionaires for a very small investment in the past.

It is difficult to become a millionaire with cryptocurrencies if you invest in them now, but making a profit is certainly possible. If you buy at the right time and sell the coins again at the right time, you can earn a lot of money with this. Profits of a few hundred pounds or several thousand pounds are common, even with new investors.

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