Cryptocurrencies are more popular than ever before. However, with over 21 million Bitcoin in circulation and thousands of altcoins to choose from, it can be overwhelming for beginners to wrap their heads around this new digital asset class. This guide will provide an introductory overview of the major cryptocurrencies—Bitcoin, altcoins, and stablecoins—to help you understand the basics. There is a lot to learn, but this guide breaks it down into digestible sections.
What is Bitcoin?
Bitcoin is the original and most well-known cryptocurrency. It was created in 2009 by an anonymous person or group known as Satoshi Nakamoto. Bitcoin pioneered the use of blockchain technology, which serves as a public ledger for recording transactions. Bitcoins are “mined” by powerful computers solving complex math problems, with new blocks added to the blockchain every 10 minutes. There will only ever be 21 million Bitcoins in circulation, making it a scarce digital asset. Bitcoin can be used for peer-to-peer payments around the world quickly and securely. Bitcoin is considered digital gold by many investors.
What are Altcoins?
Altcoins are alternative cryptocurrencies that were created after Bitcoin. Some popular altcoins include Ethereum, Litecoin, Cardano, and Dogecoin. Altcoins aim to improve upon Bitcoin’s limitations or target specific use cases. For example, Ethereum supports smart contracts and decentralized applications while Monero focuses on enhanced privacy and anonymity. With over 8,000 altcoins to choose from, they provide investors with options beyond Bitcoin. However, altcoins tend to be more volatile than Bitcoin. Altcoins can offer unique capabilities but also come with higher risk.
What are Stablecoins?
Stablecoins are a type of cryptocurrency designed to have a stable value attached to an external asset. This helps reduce the volatility typically seen with crypto. Popular stablecoins include Tether, USD Coin, and Binance USD which are pegged to the US Dollar. Other stablecoins are linked to assets like gold or other cryptocurrencies. Stablecoins allow traders to take shelter in crypto without exposing themselves to heavy price swings. They also facilitate digital payments and lending without converting to fiat money. Stablecoins provide stability amidst cryptocurrency volatility. You can stay up to date on the latest Stablecoin news here.
How to Purchase Cryptocurrencies
To purchase Bitcoin, altcoins, or stablecoins, you’ll need to use a cryptocurrency exchange or brokerage platform. Top exchanges include Coinbase, Gemini, Kraken, and Binance. Most will allow you to link your bank account or debit card to fund your account and make purchases. Be sure to enable 2-factor authentication for account security. You can also choose to store your crypto in a secure digital wallet like Trezor or Ledger. Taking precautions is important as transactions are irreversible. Research different exchanges to find one that meets your needs.
Bitcoin started the cryptocurrency revolution but altcoins and stablecoins have expanded the possibilities. Whether you want to invest, make payments, avoid volatility, or leverage blockchain’s potential—cryptocurrencies offer exciting new options in finance and technology. This guide provided a starting point, but there is much more to explore.
