What exactly is cryptocurrency, and why has it become so popular?
By now, you’ve probably heard of bitcoin. You might even know someone who’s invested in it or another cryptocurrency. You might have even thought about investing in crypto yourself.
However, the buzzword-heavy space can be a difficult one to wrap your head around.
What is cryptocurrency, and why do people invest in it?
Cryptocurrencies are new-age digital currencies with some key defining characteristics. They leverage cryptography to provide a high level of security, meaning they are incredibly difficult to counterfeit or double-spend. Most run on blockchain technology, meaning they are decentralized and not controlled by any one entity, such as a central bank or other financial institution.
Cryptocurrencies have gained significant traction recently and particularly during the pandemic, where many young investors were flush with both time and cash (in the form of government stimulus). This prompted prices to soar, which then caught the attention of many larger institutional investors.
How do you buy cryptocurrency, and what is a digital wallet?
The first port of call when buying cryptocurrency is an online exchange, which acts similarly to a share brokerage platform, such as CommSec. Some of the more popular local and international exchanges are Coinbase, Kraken, BTCMarkets and Independent Reserve.
Once you’ve set up an account, transferred some money and run through the mandatory “know your customer” process, you can then get to purchasing your crypto. On most exchanges, this is as easy as picking what you want and hitting a big green “buy” button.